Risks and Opportunities in Managing Global Teams

Introduction

The modern economy is inherently globalized due to the development of technology and the internationalization of logistics chains. National and global markets are becoming integrated, and businesses in both private and public sectors are seeking to achieve a competitive advantage by hiring multinational teams. While this allows for organizations to potentially achieve greater efficiency, flexibility, and quality of service, it also poses certain risks as a conflict of diverse cultures and a breakdown of communication can obstruct operations (Glinkowska, 2016). Multicultural management is becoming a vital skill for skilled managers attempting to create a coherent model to manage global teams with success and accountability. This report will focus on an in-depth exploration of risks and opportunities from global teams and managerial processes to mitigate threats in a volatile business environment.

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Concept of Global Teams

Global teams are a 21st-century concept of organizational management in multinational companies. While previously, team-based projects required the presence of a team in the same location at the same time, technology allows for team members to be scattered across the globe and working virtually to discuss and engage in projects with little physical cooperation. This offers significant benefits as companies can hire for a diverse pool of talent across the world and continue working on projects almost continuously throughout the 24-hour day due to time zones. Global virtual teams are still managed by the company or project headquarters but rely on various means of technological communication. Global teams are considered a vital aspect of success in the global economy as companies rely on a geographically dispersed workforce that offers a wide range of functional expertise, deep cultural awareness of local markets, and overall talent. However, international diversity and different perspectives, as well as numerous logistical challenges, pose a number of risks for project management (Neeley, 2015).

Cultural Differences

As organizations transcend borders for international expansion, it leads to the formation of global or multicultural teams. The members of the teams will inherently hold diverse and unique cultural identities, which will affect everything ranging from their understanding and interpretation to responses and approaches to problem-solving in various situations. These are based on deep cultural contexts and national dynamics that have been shaped for centuries. Such differences may be minor or stark depending on the issue at hand but can impact work standards, appropriate behavior, interpersonal relationships, hierarchy and respect, language and communication, as week as simple comradery. A theme that has emerged in the globalized world is cultural intelligence that highlights the ability of an individual to adapt in scenarios of cultural diversity. Cultural intelligence is a multifaceted concept consisting of the mental, motivational, and behavioral dimensions, all of which change in the context of cultural exposure and experience (Shokef & Erez, 2008). Therefore, considering personal and cultural differences, it is vital to examine these dimensions of cultural differences and how they can either pose a risk or serve as a benefit for organizations seeking to establish a global identity.

Benefits

The primary benefit of cultural differences in global teams is the wide variety of backgrounds, expertise, education, and personal experience that they bring as a result of their cultural roots. It is simply impossible to attain such diversity in one country or region, even if it is a multicultural nation such as the United States. Cultural diversity actually facilitates the sharing of knowledge and expansion of horizons that can enhance creativity, innovation, and critical thinking. This is beneficial at both organizational and individual levels if guided and strategically managed. The combination of such vastly culturally different talents working together to achieve a common objective greatly increases productivity through sharing of experience and increased competition (Simpson, 2017). The differences, if managed well, have been associated with higher morale in the organization as employees undergo inclusion training and have the opportunity to work with such talent. The feeling of value and openness improves employee well-being and promotes positivity in the work environment.

Cultural diversity also greatly contributes to understanding the global markets, as it is vital to building local relationships and comprehend cultural nuances in various foreign business enterprises. Cultural differences inside an organization ultimately lead to better awareness of distinctions among markets and how to build upon such opportunities. Furthermore, it can help to comprehend the needs of local communities, thus establishing a rapport with customers and offering appropriate products and services that the culture may require. The success of organizations comes from the dynamic capabilities that the cultural differences offer, providing opportunities to seize cognitively distant opportunities and achieve a competitive advantage (Szymanski, Fitzsimmons, & Danis, 2019).

Disadvantages

Unfortunately, in management research and literature, cultural differences are often viewed as a source of problems and risks due to cross-cultural encounters. The construct of cultural distance begins with an underlying assumption that cultural differences will present various issues and costs for the organizations. In the international context, these have been identified with terms such as “unfamiliarity costs” and “institutional gaps,” among others that view differences as a cause of incompatibility and cross-cultural conflict (Stahl, Miska, Lee, & De Luque, 2017). The primary disadvantages of cultural differences can be attributed to language barriers, socio-cultural tensions, and employee disengagement.

Communication breakdown is the leading disadvantage of cultural differences. This is based on language barriers as not everyone may be fluent in English, and co-workers may have issues communicating even basic ideas or directions to each other. Furthermore, it is important to consider cultural communication styles as well. For example, some may have aggressive and confrontational styles as a norm in doing business, while in other cultures, that is disrespectful. While Western culture is encouraging of direct and open communication, Eastern culture is more reserved. In turn, the cultural differences and communication barriers may reflect on attitudes and team dynamics. Cultural differences impact team collaboration styles as some cultures value team consensus and organization while others emphasize individuality and independence (Simpson, 2017). Factors such as mistrust, misunderstanding of important concepts such as deadlines, and varying attitudes on interpersonal interactions can create a high level of an impediment to collaboration and cause project failure.

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Risk Identification and Analysis

The risk identification and analysis process is vital when working on international projects with global teams as there are inherently more unpredictable risk events that could have an impact on the project. A risk mitigation strategy must be developed in consideration of the complexity of global risks, which would be more costly and difficult to coordinate solutions for. When creating a risk breakdown structure for global projects, one must consider a wide range of political, legal, logistical, environmental, and cultural elements that would not be present in domestic projects. The management of such risks in the context of global teams must consider aspects such as organizational structure, integrated planning, project priorities, and costs. Large global projects that carry significant amounts of economic and political risk face their biggest threats towards the end of the project, thus management strategies should consider their mitigation plans with this in mind (Watt, 2014).

Risk Sources and Outcomes

As discussed previously, the complexity of global teams poses inherently more risk in many aspects. This section will discuss some sources of risks and their outcomes in the context of international teams, which greatly increase the possibility of adverse events.

Source Outcome
Staff not properly trained due to being outsourced or globally hired, failing to undergo the quality and cultural awareness training of regular employees. A range of negative outcomes including workplace tensions, schedule delays, and poor product quality.
Global teams are faced more than others with excessive schedule deadlines as other team members depend on the work to be completed on a daily basis while the project plan is finely tuned to encompass all the moving mechanisms of international development. Team members will most likely become stressed, and morale will fall. Eventually, productivity will decline, leading to errors, schedule delays, costs, and tensions among the global teams.
Global teams rely on the use of digital technologies for work and communication. Such teams often utilize emerging and complex information technology. This a common issue that is encountered among global teams as they face incompatibility of systems, technology failures, and other technical barriers. This is particularly relevant when teams work with members in less developed parts of the world where technology is not modern. This may severely hinder communication and lead to schedule delays.
Specifications and alignment of responsibilities may be lackluster or misunderstood in global projects due to communication, language, and technology barriers of attempting to balance international teams. Errors during the process and with the final product. It may be necessary to shift schedules and increase costs for development as reworks are necessary.
Change management is extremely difficult to implement, particularly for virtual teams, as there are both physical and infrastructural difficulties in offering the necessary resources or training to encompass these changes. Efficiency and cohesiveness among the global team will decrease as there will be difficulty adjusting. The overall objective alignment may be affected, leading to schedule delays and rising costs.

Risk Threats and Opportunities

As evident, the use of global teams with diverse cultures inherently intensifies teamwork risk, particularly when the extent of differences and work misalignment is increasing. Team communication risk is the first threat to global teams due to barriers such as language, distance, and technology that may hinder conversation. A lack of cultural understanding causes poor efficiency in decision-making and sharing of information, as well as the potential for a rise in conflicts and confusion. This leads to the second threat of team split risk as employees may self-categorize according to personal and cultural identity, causing division within the team dynamics. Collaboration and productivity will decrease and may cause issues as some cultures will focus on collectivistic goals while others on individualistic (Rodrigues & Sbragia, 2013).

There is a threat of team leadership risk since managing global teams requires expertise and competency that differs from traditional management. Incentives and decision-making may be challenged depending on the manager’s background (education, expatriate) and style, which may cause instability. The final risk threats which arise in global teams and the outcome of the previously described influences are delayed production and increased costs, which are major problems for any organization or project (Rodrigues & Sbragia, 2013). However, the number of difficult to predict factors and interactions in global teams causes concern regarding the risk threats to a project’s viability.

Nevertheless, in the globalization context, there are opportunity potentials that arise from the risks of global teams. The primary of which is that multinational corporations can create global research and development networks benefiting from local or site-specific expertise. The diversity of perspectives and services in global teams is vital to fulfilling the needs of international clients, which in the end, justifies the costs and schedule delays. A significant opportunity arising from global teams is innovation and creativity offered by a varied collection of viewpoints arising in multicultural contexts that are not available in traditional homogeneous groups. From a managerial perspective, it can be said that the diversity of global teams can help in better control of the employees and globally innovative projects, which require the introduction of rapid and effective changes. The emerging knowledge offered by global teams in a globally dispersed technological and market knowledge can be invaluable in gaining a competitive advantage (Stan et al., 2010).

Risk Management

A modern manager must have the awareness and skills which would allow them to solve modern problems associated with managing global teams. Managers of multinational companies should be well-versed in the internal culture of the organizations, such as its values, symbols, and management models that would allow them to operate effectively in it without creating internal risk (Glinkowska, 2016). The success of multicultural teams strongly depends on their manager leaders and their competency. A significant amount of people is unaware of how to work with individuals from different backgrounds or lack the sensitivity or accommodation training for such endeavors. Cultural awareness and intercultural communication training are necessary for effective management of global teams, helping the transfer of knowledge and facilitating effective collaboration or resolving conflict among employees (Morlan, 2012). Therefore, theoretical and anecdotal evidence proves that technical or business-oriented expertise is no longer enough for competent managers, as they require knowledge and awareness in soft skills as well as characteristics of adaptability, resilience, and transparency.

There are three general approaches to managing cultural differences, which are to ignore, minimize, and utilize. When differences are ignored under the assumption that business essentials remain the same everywhere, cultural disagreements are passed by unconsciously or intentionally. In some situations, this may be beneficial, while in others, it is a demonstration of ethnocentrism which is unhealthy for long-term relationships. Minimizing differences is made when they pose a threat to the project’s progress. A common management response to this to standardize work practices and reduce any possibility of cultural clashes, allowing each team to operate in the way they see fit. Finally, utilizing cultural differences occurs when they are no longer seen as a risk but an opportunity. Management attempts to position the idea of recognizing the best of each culture and combining them to achieve efficient cultural synergy. However, this is the most difficult to achieve and is encountered less frequently (Aaltonen, Murtonen, & Tukiainen, 2009).

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Global projects generally use a combination of methods and management tactics to address the cultural differences in teams. These can be categorized into cognitive, affective, rationalistic, and coercive processes. Cognitive aspects focus on inclusivity training by teaching to understand the differences and adjust appropriately. Affective processes emphasize emotional attachment and comradery among employees focusing on common commitment and mutual respect among members. The rationalistic approach is a minimizing differences tactic that attempts to buffer and isolate differences and overcome them rationally to contain them. Finally, coercive processes are based on using the managerial status or other superiority to determine how teams operate and are often forced to ignore any differences (Aaltonen et al., 2009). It is important to note that approaches to the management of cultural differences and subsequent tactics cannot be simply used based on a specific day or situation. They must be implemented throughout the project to achieve some sense of unity and sustainability. While most managers aim towards establishing cultural synergy, it is a time-consuming and difficult process. Many project teams may not have the time, resources, or even necessity to implement, thus resorting to other methods of managing differences.

Recommendations

Certain recommendations can be made regarding the improvement of both managerial and organizational concepts that would mitigate the risks posed by global teams. The key is to create a supportive environment for such teams that would establish a structure for work and potentially reduce any missteps. First, albeit the most obvious practice, is to implement cultural awareness training which would help with understanding cultural differences as well as similarities, at least on a fundamental level. This should occur periodically to help maintain team cohesion, and an emphasis should be made on diversity skills that encourage teamwork. Next, management should provide guidance and policy that would facilitate interaction and communication, stressing intra-team collaboration and networking. Division based on culture or traditions should be avoided, and employees must be driven to leave their comfort zones at an acceptable level with understanding about the appropriate contexts of other cultures. As a result of these team-focused measures, management can help foster an open atmosphere and building trust. A climate of trust inherently serves as a basis for improved communication, and in turn, competency and productivity (Kuchukbaeva & Ostapenko, n.d.).

In management tactics, it is vital to clearly identify and specify the task objective, ensuring that it aligns with the strategic initiatives of the organizations. Global team members who may be divided by distance should be aware of where their responsibilities fit within the greater objective as well as personal priorities. A clearer definition of the task, the greater the likelihood of active participation and organizational alignment as team members attempt to figure out aspects of structure and authority. Another important aspect is to provide resources to global teams who may not have access to traditional aspects of organizational support, information technology, or human resources to help them. Thus, in the complexity of global teams, particularly cultural and socioeconomic disparities, it is important that maximum resources are provided to the whole team based on requests or managerial assessment (Stan & Alecsandri, 2010). Such environments are more susceptible to positive leadership, value trustworthiness, create supportive networks, and are predictable – all aspects which considerably reduce risk.

Conclusion

Global multicultural teams will continue to become more frequent and popular in the modern globalized world. With time, some of the challenges may be resolved as language barriers, and cultural clashes will be less noticeable as cultures become assimilated. However, there remains a risk inherently posed to project success in global teams, which can be mitigated through managerial measures and cultural competency. Ultimately, the management of multicultural employees plays a vital role in facilitating communication and collaboration while taking advantage of the opportunities to draw upon the numerous benefits that such teams could offer.

References

Aaltonen, K., Murtonen, M., & Tukiainen, S. (2009). Three perspectives to global projects. Managing risks in multicultural project networks. Web.

Glinkowska, B. (2016). Managing teams in the multicultural organizations. Journal of Intercultural Management, 8(2), 55-69. Web.

Kuchukbaeva, A., & Ostapenko, G. (n.d.). Managing multicultural teams in high-technology companies. Web.

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Morlan, C. (2012). Managing multicultural teams. ASK Magazine. Web.

Neeley, T. (2015). Global teams that work. Harvard Business Review. Web.

Rodrigues, I., & Sbragia, R. (2013). The cultural challenges of managing global project teams: A study of Brazilian multinationals. Journal of Technology Management & Innovation, 8, 38-52.

Shokef, E., & Erez, M. (2008). Cultural intelligence and global identity in multicultural teams. In S. Ang & L. V. Dyne (Eds.), Handbook of cultural intelligence: Theory, measurement, and applications (pp. 177-191). Armonk, NY: M. E. Sharpe.

Simpson, D. (2017). Advantages and disadvantages of international virtual project teams. International Business and Global Economy, 36(1), 275-287. Web.

Stahl, G. K., Miska, C., Lee, H.-J., & De Luque, M. S. (2017). The upside of cultural differences. Cross Cultural & Strategic Management, 24(1), 2-12. doi:10.1108/ccsm-11-2016-0191

Stan, A.S., & Alecsandri, V. (2010). Managing global teams. Studies and Scientific Researches Economics Edition, 15. 473-479. Web.

Szymanski, M., Fitzsimmons, S. R., & Danis, W. M. (2018). Multicultural managers and competitive advantage: Evidence from elite football teams. International Business Review, 28(2), 305-315. Web.

Watt, A. (2014). Project management. Vancouver, CA: BCcampus. Web.

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