Cultural Challenges in Stakeholder Management Processes

Abstract

This research document will summarise and discuss cultural challenges in stakeholder management processes. The first part of the document is literature review. In this section, definition and types of national cultures will be introduced. This will help readers to have basic knowledge on how cultures impact individual behaviours and perceptions. Then, common challenges that are collected, studied and discussed by various researchers in the field of project management will also be included. The key purpose is to give readers general understanding and views on how cultures impact stakeholder management processes. The final part of this document will mainly discuss about solutions which can be used to deal with cultural challenges. Examples and best practices of researchers will be citied to enhance arguments. The recommendation from this research report is that if project managers can help stakeholders to see, accept and respect differences in cultures of each other, they can increase the successful rate of projects and project management.

Contents

1. Introduction

2. Literature review

2.1. National culture

2.2. Stakeholder analysis and management

2.2.1. Missing important stakeholders and requirements

2.2.2. Conflicts between stakeholders

2.2.3. Challenges in communication management

3. Discussion

3.1. Stakeholder identification and analysis

3.2. Stakeholder management

3.2.1. Communication management

3.2.2. Relationship maintenance

4. Conclusion

5. References

1. Introduction

In the today world, projects can be done by including stakeholders from different countries to create bigger profits and benefits. The cultural diversity can help to stakeholders to explore different layers and views towards issues, which leads to variety of solutions. Another benefit is that businesses can save money, time and resources and allocate them on the higher prioritised projects.

Despites these benefits, this practice also carries many different challenges, and cultural challenges are parts of them. This type of challenge is commonly related to national cultures which is described as values and beliefs of stakeholders. The project management process includes several sub-processes, and cultures can impact all or just few them. However, cultures mostly impact on project stakeholder management. The root cause is that individuals carry different beliefs and values which exist in their societies, so when they need to work with international stakeholders, some of them cannot accept the differences. As the result, projects and project management fail. Accordingly, several project managers believe that due to those challenges and conflicts, the international projects have higher rates of failures.

To cope with cultural challenges, it is vital for project managers and teams to understand about cultures and how individuals with distinct cultural backgrounds can behave and percept differently. Moreover, they need to know and learn about failures caused by cultural challenges. The key point is that project managers need to have general and basic knowledge on what issues are related cultures, how they happen and who they impact. Finally, after building general views on cultural challenges, a discussion about practices and methods on managing them will be included. Importantly, best practices that have been done in project management across industries by researchers and project managers will be citied to improve persuasiveness of the discussion.

2. Literature review

Culture is believed to have different impacts on the success of project management. Before identifying those impacts, it is important to understand what culture is. People from diverse cultures will have different behaviours, reactions, thoughts and perceptions towards issues they cope. Then, provided solutions can also be vary thanks to different points of views about issues. Moreover, cultural diversity also affect how project teams should be managed and operated. Thus, it is crucial for project managers to understand about culture.

This section will introduce and discuss about National cultures, and how it drives human operations. Then, a literature review about failures and challenges caused by cultures in stakeholder management will be added.

2.1. National culture

National culture is a set of behaviours that people have and strive towards in their society. It differs from one part of world to others and it can be said that culture affects how people operate. Culture is usually passed down from one generation to the next (Kogut & Singh 1988). Thus, forcing a set of values or practices over people from distinct cultures may not succeed, and distinguishing values of countries explains differences to work issues, manners and motivations.

Accordingly, Hall (1976) introduces concepts of high context and low context, which refer to how people communicate in distinct cultures.  Most of Eastern countries including Chinese, Japanese and Korean have high context cultures; while, Western countries have low context cultures, such as German, American and Canada. Differences can be derived from the extent to which meaning is transmitted through actual words used or implied by the context. High context is about a lot of unspoken information implicitly transferred during communication. While, low context involves a lot of information exchanged explicitly through the message itself and rarely is anything implicit or hidden.

It is expected that people from distinct cultures may work and interact with team members distinctly. Individuals from high context cultures prefer to work in groups and rely on their team to solve issues and support each other. Accordingly, personal and professional relationships often intertwine. In contrast, people from low context cultures prefer to solve issues individually. They focus on self-study, self-training and self-research to find essential information and knowledge to solve concerned issues. Moreover, they do not want to mix up between personal and professional relationships (Kim, Pan & Park 1998).

Moreover, culture context impacts on perception. Generally, individuals from high context culture prefer to receive and trust information from their closed groups than information provided by outsiders. Additionally, they are highly subjective and tend to focus on the specific rather than on the general. Moreover, perception in high context culture is influenced by other factors, including facial expressions, behaviours and gestures of the message senders. Thus, people from high culture context can anticipate the needs of people that they talk to. In contrast, in lower culture context, people are unable to do the same because they depend on the verbal messages rather than body languages and accept objective messages as truths. As a result, normally, they skip emotional statements or feelings of their interlocutor in a conversation (Gamsriegler & Informationsberufe 2005).

2.2. Stakeholder analysis and management

Good stakeholder analysis and management greatly contribute in the success of project management because the successfully project and project management should meet expectations form stakeholders. However, to successfully analyse and manage concerns and interests of stakeholders, project managers need to cope various challenges, and culture is one of them. This challenge usually appears in international projects in which project managers and stakeholders come from distinct cultural backgrounds.

2.2.1. Missing important stakeholders and requirements

Lückmann & Laumann (2016) mention that intercultural projects across industries have high failure rates due to cultural differences. They state that as diverse cultures hold distinct values and beliefs, project teams and managers may not identify the correct concerns and interests of project stakeholders, which leads to that they can miss important unspoken requirements of stakeholders. Additionally, Mok, Shen & Yang (2015) comment that in some cases, important stakeholders are left out because they are not important in cultures of project managers and teams. A recent example is the large sea-crossing bridge project designed to connect Zhuhai in mainland China to Hong Kong and Macao, which has been delayed because the environmental concerns of vicinity were left out during stakeholder management phase (SU & GAO 2012). Therefore, culture challenges stakeholder management.

2.2.2. Conflicts between stakeholders

Moreover, Lückmann & Färber (2016) add that conflicts between stakeholders themselves commonly happen in projects because they believe and value different important motivations and requirements based on their cultural aspects. Verner, Beecham & Cerpa (2010) say that project motivations and satisfactions towards project outcomes are diverted by cultural backgrounds of stakeholders; for example, IS engineers in Japan and Netherland hold different expectations about project outcomes because their expectations are affected directly by their attitudes in lives and values and beliefs in their nations, so they will build the list of project outcomes with different expectations needed to meet before the projects can actually be sign-off. As results, project managers and teams need to focus on effectively and efficiently solving conflicts between stakeholders’ expectations and values. Another important point that project managers and teams need to take into account is that proposed solutions and ways they handle those conflicts also need to fit in the cultural frames of stakeholders (Nisbet et al. 2005).

2.2.3. Challenges in communication management

Lückmann & Färber (2016) also mention about communication management between project teams and stakeholders. Tran & Skitmore (2012) study about Singaporean culture in project management and they find that most of stakeholders find it hard to explain their requirements and propose suggestions and improvements towards projects. They add that uncertainties are difficult to review, address and manage properly because stakeholders hardly share their problems and concerns to project teams. As the result, they do have various hidden requirements which will ask project management teams to explore by themselves. Furthermore, when they compare with Western cultures, they comment that Western stakeholders are less difficult to handle than Asian stakeholders. Additionally, Pearlson & Saunders (2004) compare communication between Western and Eastern cultures. They find that individuals from Eastern cultures will explain everything from the bottom to top, which means they do not explain the main points and normally require interlocutor to understand the whole communication contexts first; while, in Western culture, they explain the same things from top to bottom, which means they usually get straight to what they need and explain themselves.

Due to differences in communication, each culture will judge the truths based on distinct set of factors. Trust is important in managing and maintaining relationships with project stakeholders; however, trust is not simply created, but through long-term processes with different impacts from external environment, including situations. Lückmann & Färber (2016) say that communication contributes to build trusts, but as cultural differences, this is more challengeable. They also suggest crucial factors, such as information transparency, problem handling, knowledge and information sharing. Another factor that can be added to the list is body language (Hall 1976). The author explains that individuals from high culture contexts consider body language of interlocutor to make decisions whether to trust. Furthermore, they also pay attentions on emotional contexts people they talk. In contrast, he states that individuals in low culture contexts will judge the truths based on what information they receive, and they normally skip emotional factors and body language of interlocutor. Therefore, Mok, Shen & Yang (2015) suggest that cultures challenge stakeholder management in different ways.

3. Discussion

This section will focus on discussing effective and efficient solutions for project managers and teams to handle cultural challenges affected to the success of projects and project management processes.

3.1. Stakeholder identification and analysis

The first step in stakeholder management is to successfully identify project stakeholders and their concerns and interests towards projects. However, in intercultural projects, some key stakeholders and requirements may not be identified properly and fully because from cultural backgrounds of project teams, these stakeholders are not as important as others. Additionally, legal systems are directly and/or indirectly affected by the values and beliefs of the countries. As under different legal systems, same stakeholders may be treated differently because their influences are directly impacted by their positions in societies. Gomes, Liddle & de Oliveira Miranda Gomes (2010) made a comparison in public service projects between England and Brazil. They used same methods to identify stakeholders and their influences in projects at two countries, and they found significant varieties in the outcomes. The first thing they can indicate that the term “stakeholder” is not fully understand in Brazilian projects compared to English projects, so project management teams need to explain and provide the list of who are required and affected the projects. Furthermore, when they discuss on who audit outcomes projects, they see that in English projects, auditors are external, including their people and public workers; while, in Brazilian projects, auditors are internal. Therefore, they can conclude since differences in legal systems, stakeholder identification need to be adjusted properly to fully classify project stakeholders and their interests and concerns.

In the study of Mok, Shen & Yang (2015), they spot cultural impacts on methods that project managers and management teams use to determine project stakeholders and analyse their interests, concerns and environments. They support their arguments by using the delays of the large sea-crossing bridge project designed to connect Zhuhai in mainland China to Hong Kong and Macao. The authors explain that what missed in during the stakeholder identification and analysis phase is the interests and concerns of people in Hong Kong and Macao. Unlike in China, stakes of people in Hong Kong and Macao do matter and affect the whole project, but the management teams misunderstand and do not cover them in project stakeholder analysis. As the consequence, the project is postponed until they solve conflicts.

Although, there are many methods that can be utilized to identify and analyse stakeholders, project managers and management teams are required to adjust methods to match with the cultural frames, so that key stakeholders and their requirements are not missed. Mok, Shen & Yang (2015) suggest that project managers and management teams need to understand differences and threats brought by cultures and propose possible and essential strategies and standards to modify methods they use for determining and analysing stakeholders. For example, in discussion towards methods which should be used to explore stakeholders’ interests and influences, they propose five strategies which are “adaption”, “compromise”, “avoidance”, “dismissal” and “influence”. Additionally, project managers can combine diverse analysed methods to determine internal and external factors involved in stakeholders’ opinions. Olander (2007) combines three different methods in his study: stakeholder attributes, stakeholder vested interest-impact index and stakeholder position towards the project, which are introduced by different researchers. The result of his research determines that by combining different tools, stakeholder impacts are comprehensively assessed in term of their nature, probability, intensity and their attitudes. Additionally, Nguyen, Skitmore & Wong (2009) add that it is also important to consider about the knowledge of stakeholders about the project because they believe that the more knowledge stakeholders have about projects, the more influenced they are. Therefore, it is suggestable for project managers and management teams to utilize suitable strategies and combine distinct methods to successfully identify and analyze project stakeholders and their impacts. Generally, Gomes, Liddle & de Oliveira Miranda Gomes (2010) also state that across cultures and legal systems, stakeholders still do share some common interests and values towards projects, so if project managers and teams can successfully pull off these commons and address differences, they can simplify solutions to cope cultural challenges in intercultural projects.

3.2. Stakeholder management

After successfully identify stakeholders and their impacts, project managers and teams need to focus on managing them. Stakeholder management includes education, communication, mitigation and compensation. In this section, the impacts of cultures on managing communication and maintaining good relationships with stakeholders will be focused and discussed.

3.2.1. Communication management

As per explanation from Hall (1976), it is understandable for individuals from dissimilar cultures to consider distinct contexts in communication. Accordingly, in intercultural projects, it is significantly essentials for project managers and teams to utilize potential and beneficial communication solutions to be able to approach stakeholders’ needs and difficulties. Lückmann & Färber (2016) provides some examples as conflicts in communication by cultures; one them is that in an intercultural project of India and Germany, Indian technical teams always say “yes”, even when they mean is “no”, but German business teams do not interpret it correctly. To overcome the problems, they highly suggest that project managers and teams need to ensure the acceptable amount of communication because they need to understand differences in values and beliefs of stakeholders, so that they can solve them.

Additionally, communication channels are also significantly diverse between cultures. In the research of Gomes, Liddle & de Oliveira Miranda Gomes (2010) about differences of stakeholder management between England and Brazil, they see that in Brazilian projects, project teams initially contact stakeholders via email and they do receive positive and quick replies from them. In contrast, in English projects, they comment that stakeholders do reply slower and some of them do not reply as they miss these emails, but they prefer phone-calls and face-to-face conversations. As the result, it is important to choose correct communication channels to approach stakeholders.

Moreover, instead of focusing on choosing the best communication channels for one group of cultures only, it is significant to provide a common and agreed channel in which stakeholders can quickly and simply communicate with each other and project teams. Therefore, online communication channel becomes popular because they can connect stakeholders regardless geographical gaps. Nevertheless, project teams need to include beneficial frameworks, they can provide good online communication channels. Crossman & Bordia (2012) introduces Puzzle piercing framework, which is used to build intercultural online communication channel for university. They identify four important dimensions: Institutional Support which is about rules and procedures defined by project teams and stakeholders; Project and Course Goal Alignment describing that the chosen channel should support and enhance project goals, missions and visions; Intercultural and interpersonal relationship management which is about trust between users; and Technological capabilities meaning that all possible technology should be considered. They conclude by applying this frame in business environment, they can reduce the risks caused by cultural diversity and costs and save time for stakeholders and project teams. Generally, despite differences in cultures, by choosing a beneficial communication channel, the project teams can handle cultural threats in communication management.

Figure 1: Puzzle piercing framework

3.2.2. Relationship maintenance

In intercultural projects, building and maintaining relationships are key practices that require project managers and teams to pay most attentions on. There are many studies focusing on explaining how important these practices are and identifying key factors that can be helpful to readers to follow. According to Lückmann & Färber (2016) and Crossman & Bordia (2012), trust is the most significant factor when building and maintaining relationships and dealing with conflicts between stakeholders and within projects. Crossman & Bordia (2012) state that before any communication channels can be utilized, it is important to create trust between stakeholders and maintain their trusts.

However, to build and maintain trusts is not simple practices, especially under intercultural environments in which perceptions and behaviours of stakeholders are determined by the values and beliefs that they follow.  Lückmann & Färber (2016) think that trusts can be affected by several factors, including differences in competitive behaviours, contexts related issues, different perceptions of vertical relationships and philosophical differences between national cultures. For example, they find that misunderstandings on any hierarchical level, or in between stakeholders, lead to disappointment, re-work or fear. To solve issues related to trust, project managers and teams need to ensure the transparency in information and b Lückmann & Färber (2016) detect that when requirements or specifications are collected and passed or when bad news and issues need to be delivered, transparency is greatly sensitive because without it, problems are occurred because stakeholders are confused by various information sources and then, their trusts are impacted. Moreover, project managers and teams need to ensure that all stakeholders are communicated sufficiently. By providing enough amount of communication, project managers and teams can quickly solve root uncertainties of stakeholders, so that problems cannot happen (Lückmann & Laumann 2016).

The final lesson for future project managers and teams in dealing with intercultural challenges is that they need to prepare themselves with knowledge and information related to cultural differences in behaviours and perceptions, so that they are able to foresee possible issues and conflicts and quickly build up solutions to prevent them from occurring. It is also crucial to ask stakeholders to be ready, respect and accept behaviours and perceptions of other stakeholders from distinct cultural background because when stakeholders understand and accept differences, the rates that problems occur will be minimised (Lückmann & Laumann 2016).

4. Conclusion

In conclusion, in project management, stakeholder management play a vital role because if project managers and teams fail to collect, analyse and manage interests and concerns and even stakeholders themselves, the project can be delayed or cancelled, and this is the most common reason of failure. However, to manage stakeholders in intercultural projects is not a simple task because it involves values and beliefs of stakeholders. There are common problems which can be found in projects across industries. In the beginning, it is clearly to see that significant stakeholders and requirements could be missed due to different cultures between project teams and stakeholders. Secondly, conflicts commonly happen between stakeholders because their perceptions, views and behaviours are distinct, which is driven by beliefs and values in their societies. The final challenge is how project managers and teams can successfully manage communication between stakeholders, so that conflicts and issues cannot occur.

To cope with these challenges, solutions are proposed and supported by arguments from different researchers. First of all, during stakeholder identification and analysis, it can be beneficial if project managers and teams can combine different methods when they identify and analyse stakeholders and requirements. By performing this practice, cons of methods can be solved by pros of other methods. Then, in communication, it is suggested that project teams need to know and understand factors that affect the effectiveness and efficiency in communication between different cultural stakeholders. Moreover, significantly, a common communication channel needs to be provided, so that all stakeholders can smoothly raise and discuss their concerns with each other; in this document, a framework to build online communication channel is also introduced briefly. Finally, to maintain relationship with stakeholders, trust is essentially required to build and consolidate because without trusts, many issues can happen. To build and maintain trusts in intercultural projects, some sample practices are proposed, including involving transparency in information and knowledge sharing and problem handling and ensuring sufficient amount of communication between project teams and stakeholders and stakeholders themselves. The recommended lesson for future project managers and teams is that they need to know and understand differences in cultures of stakeholders that they work with, so that problems can be foreseen and prevented from occurring.

Challenges and solutions in this document are predictable and commonly happened in projects across industries, so through this document, future project managers can be ready to face and solve cultural challenges. It is also understandable that project managers need to convince stakeholders to understand, accept and respect differences between cultures.

5. References

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