In companies in developing countries, imported management systems (like imported technology) can greatly boost efficiency and profits – but not when they run counter to local customs and values. In such cases the imported techniques may need to be adapted to suit the local reality, or quietly dropped.

When an American manager is appointed to a senior expatriate post in a Chinese-

American joint venture company in Shanghai, he neglects to observe the cultural realities and decides to introduce a new bonus scheme with the aim of boosting manufacturing output.

The American tries to convince local managers that bonus payments should henceforth be based on the performance of individual employees. However, Chinese managers have serious doubts about the new scheme. Subsequent events prove them right.

In China, team working is the norm and numerous complaints from employee representatives eventually force the company to withdraw the bonus scheme. The manager later admits to American colleagues that he misunderstood the situation and that the introduction of individual bonuses undermined employees’ commitment to their workgroups.

The American discovered how an expatriate manager’s ability to successfully introduce new methods depends on first meeting the expectations of the local workforce.

1 To what extent can the failure of the new bonus scheme be attributed to inadequate cross-cultural communication?
2 What alternative actions should the manager consider if he wishes to increase manufacturing output?