If you’re familiar with cultural theory you will have come across Trompenaars first orientation in which he highlights the difference between universalism vs. particularism, essentially asking what is more important, the rules or the relationships?
What this tells you is that the North American and Northern European countries are heavily weighted towards rules based decision-making. A telling sign of this is the length of their contracts and the plethora of legal firms and associated services found in every business district.
When executives from these regions move overseas, they are exposed to Relationship based decision-making, which is sometimes described as Wasta (Arabic: واسْطة) in the Middle East. (An Arabic word that loosely translates into 'clout' or 'who you know'). What this refers to is using one’s connections and/or influence to get things done, including government transactions such as the quick renewal of a passport, waiving of traffic fines, and getting hired for or promoted in a job. Examples of this can be seen across the world including Sociolismo in Cuba; Blat in Russia or Guanxi in China.
Decisions in this context are no longer based on “the rules” be they social, legal, or guided by ones moral compass. They are now based on relationship, bringing in amongst others, complex factors that include community, family and tribe.
Relationship based decision making is nothing new. In fact, two thirds of the world outside of North America and Northern Europe operate in relationship oriented decision making cultures.
Relationship-based decision making in the context of contracts and sales.
In relationship oriented decision making cultures less time is spent on putting together a contract whereas rules based oriented decision making cultures spend a significant amount of time on the contract. The fundamental difference being that the contract is seen as an expression of the relationship for rules based decision-making cultures. Yet in relationship oriented decision-making cultures it is the relationship that keeps us on track, so when there are problems at a later stage you will hear two arguments.
On the rules based decision-making side you will hear rumblings of “Our partners are not sticking to the contract and cannot be trusted”. Whilst in relationship based decision making cultures you will hear that “Our partner is not interested in developing our relationship and cannot be trusted”
Where this can be seen further compounded is when businesses are negotiating sales. In relationship based decision-making cultures, time and money is invested in the client and in maintaining the relationship. This in rules based decision-making cultures can be viewed as “bribes” and inappropriate “gifts”.
We have seen examples where MNC’s have implemented cultural policies that restrict the amount of money that can be spent on a potential client, in the hope of preventing what is considered overspend, improper conduct and even bribing.
In one team a senior sales person even admitted: “I don’t declare all my expenses. I would rather pay for the odd dinner or coffee myself and continue investing in the relationship. If I declared everything I spend, I would be in breach of our cultural policy”
Relationship based decision-making cultures are built on a fabric of entertaining, whether that is taking your clients for dinner, karaoke or paying for coffee. Not entering into this relationship dance of getting to know your partners is considered rude and is a sign that you cannot be trusted.
So what can a Rules-based decision making organisation do to ensure success in a Relationship based decision-making culture?
Rules based organisations need to learn to build relationships and more importantly budget for it. For sales there is a requirement for upfront investment as well as expenses associated with maintaining the relationship. Where contracts are concerned keep them shorter as too many clauses can be interpreted as a lack of strength.
Don’t be afraid to break a few rules in the interest of developing a relationship. Relationships are not built on rules, they are built by people. So whilst you should maintain central guidelines be sure there are local adaptations and that discretion is given to your local team to manage the relationships.
- Beth Yoder
What do you give weight to? Rules or the decision?
Mixing relationship and rules based decision-making cultures can impact revenue streams and a company’s ability to partner and grow. A combination of relationship and rules based decision making in teams should be a strength, but often creates mistrust and makes it difficult for individuals to work together. Contact us to find out more about resolving these challenges.