Decide who makes the final decision

Specify when a decision is final or temporary.

Among the many differentiating factors between cultures, the individual or group who holds the power of decision-making is one factor that affects cross-cultural business transactions regularly.

On average, cultures with a high power distance centralize decision making at the top, while egalitarian cultures decide by consensus. Swedes fit the latter category; Saudis the former. Were a Swedish company to attempt a trade agreement with a Saudi company; however, distrust may derail the agreement because of the way each perceives the other’s decision-making. The Saudis may see the Swedes corporate deliberations as a sign of distrust and lack of leadership. Distrust, because they call regular meetings together without Saudi presence, and lack of leadership because the designated leaders make no decisions in the initial meetings but say, “I’ll have to discuss this with my team.” Likewise, the Swedes may feel threatened by the pressure the Saudis give them to decide at their meetings.

There are notable exceptions to the correlation between high power distance and decision-making style. Americans are egalitarian yet strongly favor an authoritarian decision-making style. Conversely, the high power distance of the German culture belies a decision-making style founded on consensus and discussion at all levels.

Decisions between cultures must be made often. Whether the decisions span nations, corporations or desks, understanding the decision-making style of your counterpart and the ways they may perceive your own decisions is an important way to avoid negotiation pitfalls. The example given by Meyer bears repeating.

Meyer describes a merger between an American and German company. His involvement is requested after negotiations cease between both parties, and the leadership hopes Smith can help them understand one another. The Germans are confused and irritated by the flakiness of the American’s decisions. Meetings that represent a fraction of the American’s employees often end in decisions without input from others. Later, those same decisions may be modified or rescinded - the Germans don’t know what to make of this behavior that withholds the opinion of many and goes back on previous agreements. Likewise, the Americans are impatient with the Germans. No amount of pressure on the leaders has given them a decision, and the Americans question the German’s sincerity and willingness to negotiate, especially when the Germans do make a decision and then refuse to make concessions later.

When making decisions on a diverse team or in a cross-team setting, I need to specify how we’ll come to our decision. If, as in the case of a typical American meeting, the final decision will be made exclusively by me it’s important to notify those who favor consensus. Otherwise, these same individuals may feel distrusted because the decision I made wasn’t fully hashed out with them in a formal meeting. Likewise, where consensus is preferable, I need to inform the team that the decision and responsibility will be shared among us all. This may reduce the shock if the decision has consequences which are borne by the entire team and I am not taking full responsibility for them. Because people are diverse and decisions differ, there may be opportunity to exercise both styles of decision-making depending on the circumstances. Those decisions which require the greatest buy-in may benefit from consensus to establish mutual responsibility and action. Other decisions may require quick execution best served by a top-down decision-making style. Communication to the team about the style of decision-making will reduce confusion when both of these styles are present.

Related to clarity in who makes decisions, there’s some cross-over with the need for single ownership of an action.

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