The World is Fast Becoming a Global Village

Introduction

The world is fast becoming a global village and globalization is on the increase as the economies of many Asian, Gulf and Soviet region countries grow, increasing their level of competition with the Western countries. With fiercer competition, organizations have a higher need to maintain cost efficiency to remain competitive, which may mean having to move their operations to low-wage countries, a move that has been precipitated by the advancement in technology.

However, moving to the global market could be challenging to an organization and though being successful could mean substantial value to the organization, the probability of success is low. According to a research by Harvard Business School, in an analysis of 20,000 companies in 30 countries, the return on assets for companies selling abroad was an average of -1% for the first five years, 1% after 10 years and only 40% of the companies reach 3% return of assets. Some of these losses could be tied to project success, which according to a Pricewaterhouse cooper analysis state that only 2.5 percent of global businesses achieve project success (Stanleigh, 2006). While, according to a PMI research in 2006, only 14% of standard projects were deemed failures.

Global projects are characterized by complexity, risk, uniqueness, diversity, dynamics and limited resources. With the apparent low levels of project success and high levels of complexity, why do organizations go global? Some of the reasons are; global presence, increase in global market share, market power, global political power or effectiveness, realization of gains, access to unique or scarce resources, nearness to market, potential reduction of risk, reduced labor costs, reduced regulation and taxes.

To effectively manage a global project, we analyze the factors that affect the success of global projects and the factors that are critical to the success of global projects. It is important for the project manager to handle the complexities in a global project.

Managing Complexities due to Culture in a Global Project

Complexities in a global project could be in the form of cultural difference, time zone differences and language which can lead to conflict andy affect the ability of the project team to cooperate.

Cultural Differences – Understanding cultural differences is critical in project management because culture determine behaviors and attitude, since project management involved managing people, it is important that the project manager consider cultural differences and how they affect individual styles, if the people tend to be formal or informal, if people communicate directly or indirectly, how sensitive they are to keeping time which is critical to project scheduling, how agreements are made and if they tend to be formal or informal, how teams are organized, how negotiations are done, how much emotions are involved and the goal for negotiations.

Cultural differences can be summarized by Hofstede’s Dimension of national culture, which studies the cultural values that distinguish people based on their nationality, Such as; power distance, uncertainty avoidance, long term orientation, masculinity/femininity, individualism, pragmatism, long term orientation and indulgence vs restraint.

Culture can also be analyzed by how people relate with other, with time and with the external environment, to understand how this relationship could affect a project. Trompenaars developed a model to map these differences in national culture and summarized relations with people into; universalism vs particularism, individualism vs communitarianism, Neutral vs Affective, Specific vs Diffuse, Achievement vs Aspiration. Relationship to time can be summarized into; Future Orientation vs Past Orientation, Sequential vs Synchronic and relationship with external environment is summarized into having an Internal locus of control vs an External locus of control.

Other models are the Myers Scales of Culture which studies leadership preferences and management styles in different cultures and Koster cultural gap tool which studies, how culture affects project management in the dimensions of; Equality vs Hierarchy, Embracing risk vs Avoiding risk, Individual vs Group, Universal vs Circumstantial, Conflict vs Consensus, Task vs Relationship, Achievement vs Status or standing, Sequential vs Synchronic, Theoretical Vs Pragmatic.

Time Zone Differences - Working with different time zones means the project leader would have difficulties scheduling meetings with team members on different time zones, which becomes a deterrent to the team’s communication especially when meetings involve several team members to make instant input of ideas or solutions to resolve project difficulties.

Language – Language barriers mean that communication is impaired, there will be the problem of communication not translating to the literal meaning, causing some communications to be lost or misunderstood. Even when the project manager is bilingual, or members of the team are bilingual, there are still communication challenges based on their level of proficiency.

Planning in Global Project Management

Planning is critical to success for both standard and global projects, however, in global projects there is a difference in the degree of complexity involved. Since international projects are characteristically unique, there are a lot of unknowns at the planning stage which means that there will be a potential for change to the project estimates due to scope creep, hence, project manager must plan for adequate buffers and contingencies.

Planning schedule estimates: Factors that could affect the schedule of an international are; extra time for co-ordination, communication and training, additional public holidays and vacation, extra time for the local adaptation of tools, processes and systems, additional time for team building activities.

Resource planning: Planning for resources can be difficult if there is a limited availability of qualified staff or of staff who can perform the tasks within acceptable ethical and moral standards, how much training would resources require to be up to speed. If all of these factors are not satisfied, the project could be understaffed which means overcommitment for the available resources, hence, resource leveling which would affect the project schedule.

Planning budget estimates: The project manager would have to factor in labor costs bearing in mind that labor prices are different in the global location, also payment intervals and terms may differ. Another factor for consideration is travel costs which is imminent in global projects.

Planning for quality: The project manager for a global project should consider the following aspects that are critical for quality; are there similar measurement systems in the global location of the project? Are specifications clear and comprehensive? Is there a need to cross-check project specification to ensure they meet the standards of the world or host market?

Communication in Global Projects

One of the caveats of communication in a global project is language differences, which can be in the form of; loss of speed in transmitting information, loss of creativity when ideas and innovations are translated from one language to another, misunderstanding and conflicts. Cultural differences could also affect communication styles in the physical context of facial expressions and non-verbal language, in the social context which is a consideration of the general norms and norms or status of the communication partner, in the situational context of the surrounding events of the communication partner.

Generally, cross- cultural communication is classified into high context where individuals tend be more explicit vs low context cultures where communication is more implicit. This can further be categorized as direct vs indirect, elaborate vs succinct, personal vs contextual communication styles. To enhance effective cross-cultural communication, the project manager has to follow certain guidelines, for example; never take anything for granted, face-to-face communication is more effective than telephonic or video conference, delay replies to perceived negative emails, practice active listening, be patient and willing to paraphrase, consciously seek and provide feedback, stipulate response time for written communication.

Managing Risks in Global projects

The presence of increased complexity increases the potential for risks in global projects, particularly emergent risks. These risks could be; scope creep, corruption, bribery, compliance risks, bankruptcy of foreign partner, radical drop in market demand, exchange rate risks or the risk of non-payment, the ability of the project manager to manage these risks is essential to minimize losses and improve project success. Risk planning in global projects is different from risk planning in standard projects, there is a high potential for emergent risks in global projects. Some additional sources of risk in global reports are; Internal risks due to insufficient planning caused by poor visibility since global projects are unique. External risks due to factors such as inflation, corruption, change in regulations. Risks due to unpredictable factors such as natural disasters, outbreak of diseases or political revolutions.

Just like in standard projects, risk management in global projects involves risk identification, risk analysis and prioritization, risk assessment, risk planning and control. An important tool for analyzing risks in global projects is the PESTEL analysis, this tool takes into consideration the political, economic, social, technological, environmental and legal climate of the global location to analyze the potential for exogenous risks. There is also the Impact Probability Matrix tool for quantitative risk analysis.

After identifying, analyzing, prioritizing and assessing risk, the project manager has to device strategies to respond to risk, such as; risk avoidance which involves planning for ways to avoid the risk, risk mitigation which is reducing the likelihood of the occurrence or the impact of that risk, risk acceptance which is done when the risk is considered manageable or unavoidable, risk transfer which involves transferring or outsourcing the risk to another party for example insurance companies, the cost of which should be factored into the project budget; risk absorption which involves forming a consortium, joint venture or an alliance so that the risk can be shared by the parties.

Contingency buffers are essential to planning for risks in global projects, these are the extra time and financial resources factored into the project, in the eventuality of risks. A characteristic skill that a global project manager requires for effective management is the ability to be agile or flexible to accommodate late-locking (deciding parts of a project on a later stage).

Leadership in Global Projects

Leadership is an essential skill in project management even more so in global projects. The challenge of leadership in global projects is the ability to manage through, geographical, temporal, organizational and cultural distance. Characteristics that are essential for leadership in the global scene are; adaptability to local customs, authenticity, empathy, cultural sensitivity, enthusiasm, open-mindedness, patience, personal stability to cope under pressure, initiative, respect for people’s differences.

The skills necessary for leadership in global projects are;

Global organizing skills: Awareness of the political structure and ability create relationships and strategic influence which are important convince project stakeholders of the importance of the project.

Technical skills: To achieve the enable the project manager to lead effectively the team, make sound decisions and achieve the objectives of the project.

Cross-cultural skills: the ability to access and understand cultural differences and adapt accordingly

Communication literacy: Ability to communicate in different languages and communication technology to overcome communication barriers and earn team member’s respect.

Negotiation in Global Projects

Negotiation in global projects require special skills and an awareness of cultural differences and how it affects the negotiation styles of the partner such as their relative emphasis to tasks vs interpersonal relationships, how parties attempt to influence each other, do they rely on rational arguments, emotions, charisma or traditions. How does time affect their negotiation styles, do they tend to proceed quickly, delay or stall? Who is responsible for making decisions in the negotiation process, are delegates empowered or do you need to speak to the boss for final decisions?

To understand how cultural differences, affect negotiations, there is a need to analyze and understand the general negotiation styles of the counterpart’s culture, for instance;

US negotiations: follows a linear agenda, low-context communication style, focus is on facts, quick pragmatic decisions, prefer informality, conscious of time, would make concessions only when an equivalent is offered by the partner.

Russian negotiations: relationships are a focus, partner can be access by how much connections they have to influential people, display emotions, communicates directly, assertive and competitive, may make occasional threats, compromise is a sign of weakness, final decisions are made up to the boss, not focused on time.

Chinese negotiations: makes decisions based on gathered intelligence, hard bargaining, emphasizes friendship, decision making is up to the individual with technical expertise on the subject.

Japanese negotiations: negative emotions are concealed, they dislike power display, there is a preference for group work, consensus is required for decision making, the avoid saying “no” directly, friendship is important.

Arab negotiations: uses elaborate communication style, displays emotions, negotiation is based on reciprocity, avoids confrontation, would refer to respected friends of the counterpart as a form of persuasion, does not focus on time.

Lessons learnt in Global Projects: Culture could be a hinderance to capturing lessons learnt at the completion of a project, the project manager’s ability to understand the impact of cultural and how it affects the team’s willingness to give accurate feedback is key. For example; people from high-context cultures tend to avoid admitting failures and mistakes to prevent losing face, people from collectivist cultures may be unwilling to pass on their experience to other teams.

The nature of global projects can also impact the ease of capturing lessons learnt, for example, complexity and lack of transparency due geographical dispersion could make it difficult to collate the data necessary for a comprehensive lessons learnt, global projects tend to span long periods of time and evaluations that are left till the end of such a project could mean key individuals have joined or left the project midway and even if personnel have remained, they would have lost details of the entirety of the project.

Communication can also play a part in collating data for lessons learnt in global projects, when the sender has poor linguistics ability and is unable to capture ideas accurately in the preferred language, if the sender is considered marginal to the organization, his input may not be valued, if stereotypes exist against the nationality of the sender for example a Palestinian project manager and an Israeli team member.

Finally, the organization could be a hinderance if the culture does not support innovation and open-mindedness, reluctance to tap knowledge from other people’s experience or expertise, feeling that it does not apply to their unique situation, if the organization does not enforce or provide incentives for giving feedback, there is little motivation to do so.

Conclusion

National character stipulates that; people of similar culture are alike in certain ways, they are different from other cultures in the same respect and the characteristics can be ascribed to individuals based on their citizenship. Therefore, for a project manager to be successful in the global spectrum, there is a requirement for a myriad of soft-skills, many of which are not necessarily be applicable in standard projects, combined with technical skills. These soft-skills are best learnt by experience and exposure to other cultures.

Critical success factors in global project management are; the ability to recognize that knowledge, perceptions and beliefs are unique to an individual, hence, to succeed internationally, there is a need to turn off behavioral auto-pilot, be open-minded, tolerate ambiguity and be willing to adapt his behavior to the local culture.   

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