Podcast: Preventing a Potential Culture Clash at Work

That’s partially because it made a classic mistake, says Cynthia Wang, clinical professor of management and organizations. It forgot to consider the culture of its new workforce—specifically, that it expected some degree of work–life balance.

“We tend to expect people to think like us. We tend to expect people to have the same perspective as us. But, particularly in these cross-cultural interactions, we don’t get that,” Wang says.

Culture often takes a backseat in mergers, acquisitions, expansions, or any kind of business integration. But Wang says it shouldn’t. On this episode of The Insightful Leader, we consider where Fuyao went wrong and discuss how leaders can avoid making the same mistakes.

Podcast Transcript

Laura PAVIN: Back in 1998, Daimler, the German automaker best known for Mercedes-Benz, was looking to grow its share of the American market. So, it decided to acquire Chrysler, who also owns Dodge and Jeep, for a whopping $36 billion.

You might recall a particular marketing campaign from after the merger. It ran in the early 2000s and featured a bespeckled engineer for Dailmer named Dr. Z.

COMMERCIAL: Dear Dr. Z, is there really German technology? [Inaudible] John, every Chrysler uses the best of American and German engineering and design. This five-link rail suspension is only one example. They had small links for better performance and handling. Cool. What would you expect? We invented the automobile.

PAVIN: Now, importantly, when the merger was announced it was framed less as an acquisition and more as a marriage of equals. And, at first, it was a happy relationship. Profits and revenue went up. But it didn’t take long for the honeymoon to wear off.

Cynthia WANG: it definitely crashed and burned.

PAVIN: That’s Cynthia Wang, she’s a professor here at Kellogg. And she says that the issues for Daimler/Chrysler started with clashing management styles.

WANG: Daimler was more of a top-down type of culture, while I think Chrysler was more of a kind of flat organization, and it became this battle between management in both sides that was never resolved.

PAVIN: So, they fought, a lot, for over nine years until Daimler finally said, “enough!” Eventually they sold Chrysler for a mere $7 billion.

WANG: This was not a good marriage, and it was a costly divorce.

PAVIN: You’re listening to the Insightful Leader. I’m Laura Pavin. And Wang says the Daimler/Chrysler debacle is a story worth telling because it underscores a mistake that businesses make time and time again in mergers, acquisitions, expansions, or really, any kind of business integration. They forget to think about culture. In the Daimler/Chrysler case, the culture in question was management style. Top-down versus flat. But culture can refer to any of the values, beliefs, attitudes, or behaviors shared by a group of people.

Wang says these sorts of clashes are a dominant factor that prevents effective integrations.

WANG: It’s not trivial.

PAVIN: This episode, we’re going to discuss how leaders can help anticipate and work through big culture clashes. Whether they’re about to go through with an acquisition, or they’re trying to merge two different teams, or they’re just expanding into a new market with a different workforce, and they have to figure out how to manage them.

To do that, we’re going to take a closer look at a Chinese company called Fuyao Glass and what happened when they opened a factory in Ohio. Wang cowrote a case study on that and says there are a few things we can learn from their challenges and how they handled them.

The overarching takeaway, though, is this: Do your homework on the other culture before you start working together.

We’ll dive into that ... next.

...

PAVIN: Fuyao Glass was founded in 1986 in the southwest province of Fuzhou, China. It’s founder, Cao Dewang, had seen an opportunity after noticing that China was importing nearly all the glass for its emerging car industry. So, he started what would become Fuyao, making safety glass for automakers—things like windshields.

Fuyao quickly found success, building numerous factories across China and eventually the world, with tens of thousands of employees worldwide.

WANG: They really held a large market share within China and eventually they were like, “You know what? We need to actually have a presence within the United States.”

PAVIN: So, they went searching for a possible site for their first American facility. And they found one in Moraine, Ohio, just outside of Dayton.

Before Fuyao, Moraine had been home to a General Motors plant. But after the 2008 financial crisis and several tough years for the American automotive industry, the plant had closed in 2013.

It was devastating for the community with thousands of people out of a job. So, when it was announced Fuyao was buying the GM plant and bringing jobs back to Moraine, people were thrilled.

WANG: the individuals residing in Moraine were very excited that this company was coming in, and that excitement was palpable.

PAVIN: There’s actually a documentary about all of this. It’s called American Factory; it came out in 2019. The case study Wang worked on references it a lot. And it’s true, when Fuyao first comes to town everything seemed great.

WANG: It’s almost like a romantic relationship. Everything is brand new.

PAVIN: There’s a part in the movie where an American worker talks about how he shared his culture with some of his new Chinese colleagues.

FUYAO CLIP 1: I got the big idea Thanksgiving to invite my close friends, of which should have been about four or five of them. It ended up being, I think, 13. Bought a 25-pound Turkey, the biggest honey baked ham I could get, and all of the traditional trimmings. I know that in China they’re not allowed to have guns. We have my 12-gauge shotgun out there, pistols. A couple of the very brave ones wanna go up and down the road with me on my Harley. They talked about it forever. That made me happy.

PAVIN: As he talks, he scrolls through photos on his phone of his new colleagues, looking thrilled, holding guns.

The Chinese workers share their culture with the American workers too. They have meals together. Things are going well.

WANG: But then the reality hits in. And the reality is that we tend to expect people to think like us. We tend to expect people to have the same perspective as us. But particularly in these cross-cultural interactions, we don’t get that. And so, our high aspirations and our high expectations are kind of jarred.

PAVIN: The honeymoon period falls away quickly.

For starters, there was a very clear language barrier between the Chinese managers and American workers. It made working together hard.

There’s a moment in the film where the workers are examining some water stains that started showing up on their glass. They try to solve the problem together, and you can see they’re having a rough go of it.

FUYAO CLIP 2: They get upset when we’re all trying to figure something out. Everybody gets upset, and then everybody’s upset in their own language, and then everybody just walks their own way and … meet back here in five minutes.

PAVIN: So, the cracks in the foundation of this integration are beginning to form. And things build from there.

Like, there was this mismatch between Chinese leadership’s expectations and the reality of this new plant.

WANG: The main headquarters, they wanted efficiency. “Why aren’t we getting things done quicker? Why aren’t you producing so quickly?”

PAVIN: Leadership had come in and expected the new plant to be as productive as its operations in China. But the U.S. employees had a different relationship to work than the Chinese plant workers did.

WANG: At GM, they were getting paid a nice amount. There was a lot of work–life balance. Safety was a key component, and then this Chinese company comes in, and they just have different perspective, right?

PAVIN: Workers in the Chinese plants were doing 12-hour shifts with only one to two days off per month. There’s no way the American factory workers could keep up with that ... with their 8-hour days and their weekends and holidays off. And because Fuyao was paying the American workers about half of what they got with General Motors, they probably weren’t going to work much harder, anyway.

If Fuyao considered this context before opening the plant, Wang says, they could have anticipated that, built it into their projections, saved everyone a lot of discontent.

If they’d done their homework, they would have also known that safety would be an issue for American workers. Glass factories get hot. Injuries happen. Americans wanted to reduce their chances of getting injured, so they asked for protections. Fuyao wasn’t accustomed to meeting the same kind of safety standards.

So, of course, all of these problems stem from the fact that Fuyao just hadn’t thought about the culture that these American workers were accustomed to.

WANG: These are things that you need to think about, because if you don’t, what happens? People get offended. Because they’re looking at their own culture. They’re saying, “this is not appropriate.” And then there’s that clash that occurs. That’s not an easy process, but if you imagine it, if you do it early on, then it’s not going to be as painful as the disappointment of not meeting that expectation.

PAVIN: Consider the merger between the Indian company Tata and the British luxury car maker Jaguar, Wang said. When Tata acquired Jaguar, instead of imposing their specific management style, they let the British managers take the lead.

WANG: They said, “we’re an Indian company, but British managers, you manage it how you think is appropriate.” Different organizations differ in their management style. They just said, “you do what you’ve … it’s been working, and we’re going to keep it like that.”

PAVIN: it worked out. And it built up good will. And Tata was able to bring some of its own company culture into the space. They put a lot of money into R&D, took some of the products Jaguar had in development, brought them to fruition, made sure they lived up to their high-quality standards.

WANG: They basically were able to have this acquisition without a lot of the cultural baggage that we usually see.

…

PAVIN: Fuyao, unlike Tata, didn’t do their homework. They didn’t anticipate these cultural clashes or how they’d solve them. And so, things got worse.

Production projections kept falling short and the company was operating at a $40 million loss. And the morale at its American plant sank lower and lower. It all came to head when some of its American workers tried to unionize ... and failed. Many of the employees who had supported the union were subsequently fired.

So, Fuyao was hurting. And eventually they’re like, “okay, something’s gotta give.” And so, finally, they start to make some changes—changes that turned out to be pretty meaningful.

One of the things they did was they started putting a greater emphasis on collaboration between its American and Chinese employees.

WANG: Fuyao Glass ended up having a shared workspace or a shared hangout area where people can exchange ideas.

They actually started promoting more cultural team-building exercises. They hired individuals who could talk to both sides. Where before, they couldn’t even talk, right? So, have bilingual individuals who understand both cultures.

PAVIN: They created formal and informal moments for connection. It gave workers a chance to learn about each other’s backgrounds and understand the cultural perspective they were bringing to the workplace. Wang says that intentionally making space for these connections is a wise practice.

WANG: That in itself establishes trust. It allows people to feel more comfortable disclosing, and more certain that, “hey, I’m not going to be punished for saying, like, I come from this country and I do this,” right? Which is often the fear is like people are worried that if they express themselves, they’re going to get punished or ridiculed … that bringing that trust down can actually have implications on how organizationally involved people feel.

PAVIN: So Fuyao made space for these connections, and people start really listening to each other. Not just hearing. And Fuyao made some changes. For example, they knew that wages were a big issue. So, they bumped those up. And they addressed some safety concerns. Got a nurse on duty and a doctor on call at all times because, as we know, work in the plant could be dangerous. Not like it wasn’t dangerous at its Chinese factories, but Chinese and American workers just had different expectations around occupational hazards.

Fuyao’s story doesn’t end here, by the way. Our telling of it does. But its real-life journey is still unfolding. And Fuyao is still working on things.

WANG: So, little by little, things are getting better.

PAVIN: Things aren’t perfect at the Ohio plant, but you know, it’s still open. And, for now, that’s a win.

…

PAVIN: If you’re a company entering into a merger or acquisition, or honestly, even if you’re just a manager who needs to bring together new teams, make sure that, along with operational efficiency and revenue projections, you’re thinking about how to merge your cultures.

Start by doing some research to figure out, what are the other culture’s norms around pay? Communication? Decision-making? How do they do their best work: Do they like to work in teams or as lone wolves? Wang says a great place to start figuring that out is with smaller, low-stakes projects.

WANG: That way you can see what some of the concerns might be in terms of cross-cultural communications. And then you can use these meetings to identify the differences in, let’s say, work style, approaches, et cetera, based on culture to be able to build that initial trust and actually have better interactions in the future.

PAVIN: Instead of coming in and bulldozing the new guys before they can get a word in edgewise, decide which parts of their culture might be worth keeping and how that might fit into your new normal.

Finally, create spaces for your employees—and you—to get to know one another, and learn about their cultural backgrounds and how they communicate. It’ll help you head off misunderstandings and learn what they care about, what their concerns are.

The more you know about them, the more likely you’ll work in harmony.

[CREDITS]

PAVIN: This episode was produced and mixed by Andrew Meriwether. The Insightful Leader is produced and edited by Laura Pavin, Rob Mitchum, Abraham Kim, Fred Schmalz, Maja Kos, and Blake Goble. Special thanks to Cynthia Wang. Want more The Insightful Leader episodes? You can find us on iTunes, Spotify, or our website: insight.kellogg.northwestern.edu. We’ll be back in a couple weeks with another episode of The Insightful Leader Podcast.