Nearly half the executives at global companies believe language barriers have spoiled cross-border deals and caused financial losses for companies, says a report from the Economist Intelligence Unit, a business research unit of Economist Group, the Economist magazine’s parent.
The report, sponsored by language-training company EF Education First, was based on a poll of 572 senior executives world-wide.
Executives at companies based in Brazil and China said they were most affected by misunderstandings, with 74% and 61%, respectively, reporting financial losses as a result of failed international deals.
Nearly two-thirds of respondents said that misfires in their internal cross-border communications resulted in lost productivity. Among Brazilian managers, the figure jumped to 77%.
To improve communications, many global companies are trying to adopt English as an official language. A multilingual approach “is inefficient and can prevent important interactions from taking place and get in the way of achieving key goals,” Harvard Business School professor Tsedal Neeley wrote in this month’s Harvard Business Review.
But English-only policies can build other communication obstacles, she wrote, because non-native speakers may withdraw from group projects, lose self-confidence or ignore the rules entirely.
Communication difficulties are becoming increasingly costly as companies seek to expand their operations globally. More than three-quarters of the companies surveyed said they expect to have an operational presence in more countries in the next three years, and nine in 10 said they expect their overseas client base to grow; but 89% also said language and custom challenges are stifling their international plans.
Despite the need for a deeper understanding of cultural and linguistic differences, many companies have been slow to offer instruction in those areas. When they do take action, they mainly offer language classes and send managers to international markets to gain exposure to how their overseas colleagues operate.
Small Firms Get Respect
Consumers have lost respect for large companies while their admiration for small, local businesses has risen, according to a new study by Weber Shandwick, a global public-relations firm.
Four in 10 consumers said their regard for large companies has dwindled over the past several years while just one-quarter said their view of large companies has improved.
By contrast, nearly six in 10 consumers said their respect for small businesses has grown; just one in 10 reported a decrease. The results were based on a survey of 1,375 consumers in the U.S., U.K., China and Brazil.
Consumers may feel big companies didn’t “share the pain” during the recession, says Leslie Gaines-Ross, chief reputation strategist for Weber Shandwick.
“We all walk down our streets and see many closed storefronts, and there’s a sense the small-business owner is suffering just like the average consumer,” she says. Corporations, on the other hand, often come off as “nameless and faceless.”
The study also found that consumers’ regard for chief executives and other senior corporate executives has significantly deteriorated. Five in 10 respondents said they have lost respect for such business leaders, while just two in 10 said their admiration has grown. The trend were considerably more pronounced in the developed economies than they were in emerging markets, where responses were more mixed.
New Handle on Crime
The information age has unleashed a flood of data that managers might use to make hiring decisions. Case in point: the proliferation of websites and companies offering quick and cheap criminal-record searches to employers.
But such information isn’t always reliable or comprehensive. Partly with this in mind, the Equal Employment Opportunity Commission recently issued new guidance to help companies navigate the tricky waters of hiring workers with criminal arrests and convictions.
While criminal convictions can in some circumstances be legitimate grounds to deny someone a job, the EEOC and academic studies have found that the use of such records has a disproportionate impact on African-American and Hispanic job applicants.
The new guidelines, which update rules first issued in 1987, include mostly small changes that the EEOC hopes will help employers better comply with antidiscrimination laws.
As in the past, employers need to consider the age and seriousness of the offense, and its relevance to the job in question. But employers now may face additional responsibilities to conduct individualized assessments when screening out applicants with legal troubles in their past. That means offering those job candidates opportunities, for example, to explain the circumstances of their convictions, offer character references and describe any rehabilitation programs in which they participated.
The additional steps aren’t required, but employers might be vulnerable to lawsuits if they can’t prove they conducted due diligence into arrests and convictions, says Barry Hartstein, co-chair of the hiring and background-check practice at employment law firm Littler Mendelson PC.
“Once you take all those factors into account, you’re in a better position to make a fair-minded and nondiscriminatory decision,” says Mr. Hartstein.
What’s also new is a stronger focus on arrest—as opposed to conviction—records. If a candidate was arrested at some point but not ultimately found not guilty, the EEOC suggests that employers conduct their own investigation into the charges, even interviewing victims of the crimes in question.
If employers fail to do so, they may make themselves vulnerable in case a rejected applicant chooses to sue on the basis of discrimination, Mr. Hartstein says.