Culture is how people make sense of the world. From the cacophonous streets of Mumbai and sultry beaches of Brazil to the neon lights of Tokyo and rhythms of Mexico City, culture gives us our identity. Culture is also scalable. Nations, regions and workplaces have cultures that define their collective individuals. When groups of people behave according to a shared understanding of values and sensibilities, they are contributing to a culture. Businesses in growth economies must act now to establish prosperous internal business cultures that embrace the emerging opportunities of a digitally transforming world. Build Consensus Throughout the Business The evolving global economy presents growth nations with unprecedented access to a borderless international marketplace. The rapid pace of change, however, has many business leaders at odds regarding the value and role of culture to their financial success. This lack of consensus can muddle a company's vision, as well as confound a business' workforce and consumer base. C-suite executives, managers and HR professionals — in businesses throughout the world — often have different interpretations of what internal culture means to profitability. The high-level takeaways from Mercer's research report, "Mitigating Culture Risk to Drive Deal Value," which focused on the mergers and acquisitions industry, offers businesses throughout growth economies valuable insights into the complexities of building consensus around culture: C-suite executives rate governance and decision-making processes as the most important components of culture (60%). Independent advisors believe performance management (measurement) can and should play a role in driving organizational change and defining culture (45%) — only 18 percent of HR professionals agree. Corporate development professionals (41%) think that risk tolerance and management can undermine a transaction. HR professionals rate collaboration (69%) and empowerment (54%) as the most important components of culture. Businesses in growth economies should be proactive about defining who they are as a culture. Does the culture value technological innovation and input from employees, or is it risk-averse and strictly hierarchical? Does the company stress individual effort or teamwork? Is it focused on international growth or regional prominence? Is it rebellious and irreverent or humble and serious? What is the definition of success, and how are the employees and customers factored into that definition? An effective corporate culture begins with building consensus throughout the leadership, workforce and operations. Clearly Articulate a Reason for Being Every business leader and employee must be able to answer the question: Why do we work here? The response to this self-reflective ask compels the people within a business — from top decision-makers to workers at every level — to internalize the reason the business exists. This understanding provides meaning and context as to why an individual elects to be part of the business and its mission. Next, business leaders must articulate that reason for existence into strategic objectives illustrating the market value the business offers to whom and how. The strategic goals must accommodate the budget and timeline as understood by all employees — unifying everyone in a collaborative journey pursued within a shared value system. In Asia (excluding Japan), according to the "Mitigating Culture Risk to Drive Deal Value" report, 67 percent of respondents believe collaboration is a top behavior in "high-performing" work cultures. In Latin America, 65 percent of respondents agreed. However, "collaborative" did not make the top five list of drivers for high-performing work cultures among Japanese respondents. It is critical for businesses in growth economies to establish strong internal cultures before attempting to make an impact in the competitive global economy. That internal culture, however, can be inspired by a variety of influences — including geography. Hangzhou-based Alibaba, for example, has a very different culture than Shenzhen-based Tencent. A strong culture empowers businesses to differentiate themselves from competitors and effectively respond to adversity, risk and uncontrollable swings in the economy. Deciding how to approach risks and navigate challenges not only reveals the cultural values of a business but gives its employees and stakeholders a common cause that builds cohesion. A clearly articulated internal culture is key to longevity. For businesses looking to establish and strengthen their cultures in different geographies, having a fundamental understanding of geographical nuances, like collaboration, for example, can prove critical to setting and successfully achieving your strategic goals. Empower Leaders Who Live the Promise Leadership is the foundation of every prosperous internal culture. In fact, the Mercer report reveals that, in Asia (not including Japan), 69 percent of respondents indicated "how leaders behave" was the number one "top driver" in a healthy organizational culture; in Latin America, the response was 64 percent. Japan led the group with a pronounced 74 percent response affirming the importance of leadership to workplacecultures. The success of businesses can often be directly linked to leaders who embody and communicate an organization's values to employees and customers. Both Alibaba and Tencent are renowned for their respective leaders, Jack Ma (now retired, of course) and Pony Ma. Leadership supplies vision, energy and direction. Assessing and selecting leaders who best represent a business' values and promises are critical to corporate cultures. This does not always mean choosing the most accomplished or most popular businessperson, but the one with the best chemistry, as in any relationship — the one who delivers inspiration, creativity and motivates others to push themselves. Effective leaders demand accountability from every employee, including themselves. CEOs, C-suites and managers must behave according to the values and standards of the business they represent. Leadership legitimizes culture by exercising the vision and expectations of the culture. Hypocritical leaders who do not lead by example demotivate employees and undermine the public's respect for the entire brand. A culture that values the fair distribution of accountability creates rapport and stewardship among its workforce. When people feel they belong to something meaningful and bigger than themselves, they transfer that goodwill into their work. Strong cultures create quality products, services and customer experiences. Align the Vision With People & Operations Culture is the intangible force that bonds great companies. The ethereal nature of culture, however, makes it frustratingly elusive to many businesses — especially in growth economies where those cultures are entering a new era of global pressures and digital transformation. I explained in a webcast about the report above, "Culture is like the weather. We like to talk about it, complain about it and we blame it for things. But we really have no intention of doing anything about it or frankly don't know what we can do about it." To explain that businesses cannot afford to treat culture like the weather, because tremendous amounts of money and value are being left on the table. Culture, at its core, is an operational platform for people to work together. It is the epicenter of an organization's collective power. Though business cultures may be intangible, they can be easily recognized in the eyes and behaviors of employees and customers. Culture is everything from a workforce that understands its purpose and a single employee who feels professionally fulfilled to loyal customers who return again and again. Culture is when people come together and do something that gives them meaning. Culture is the reason a business exists.
Globalization continues to shape the financial services industry, requiring firms to internationalize their operations and expand their footprints across the world. In the post-Global Financial Crisis era, most financial services companies took a hard look at their corporate structures and global footprint. More recently, Brexit, and a looming trade war, have financial services firms considering non-traditional site selection locations that could shake up an industry built on the power and prestige of long-standing traditions. Venerated financial hubs such as London, New York City, and Tokyo have storied reputations and street credibility, but they are also incredibly expensive and congested in a world that is becoming increasingly cost-conscious, nimble and decentralized. Another important element that has accelerated this trend is the development of the fintech industry, which promises to disrupt traditional business models and ways these companies have interacted with their customers thus far. FinTech is poised to revolutionize mainstream banking and consumer engagement through advanced platforms and apps that will streamline mobile payments, peer-to-peer loan transactions, and modernize how people invest in stocks, cryptocurrencies, and conduct other Internet-based financial transactions through their smartphones. This decentralization of the industry presents unprecedented opportunities especially for growth or emerging economies. Determining exactly where, and how, to establish a new presence in different states, countries, or cultures requires a complicated mix of critical factors that could—without notice—devastate not only the expansion venture, but the entire brand and enterprise. The key to understanding any complex situation is to break it down into its core elements and examine it, from every angle, how those elements are connected and create either success or failure. For financial services firms, effective site selection requires a cohesive team that offers a diverse array of expertise and competencies in everything from real estate and international tax laws to environmental engineering and supply chain logistics. Navigating this level of sophistication requires extraordinary diligence. Below is a list of seven site selection challenges financial services firms must resolve to avoid costly expenses, if not permanent damage to their brands. 1. Cultural Differences: Cross-cultural communications pose a variety of unseen and unexpected challenges as different people can experience the same interaction and yet walk away with entirely different impressions and conclusions. Site selections require in-depth discussions about elaborate topics such as local licensing rules and regulations, construction and utility issues, and other culturally sensitive matters regarding labor laws, political matters, and financial protocols. Every site selection team must have members who are fluent in the language and cultures of the selected geographies. 2. Poorly Defined Requirements: Every site selection is unique and presents its own particular sets of challenges and obstacles. Too often financial services firms overlook important details in their fervor to expand their footprints and impress stakeholders. Smart site selection teams rely on built-in checks and balances to ensure requirements are clearly defined and prioritized throughout the process, from discovery to final negotiations. Simultaneously considering multiple sites helps teams abide by a definitive scope of requirements that must be confirmed with each site assessment. If the initial requirements are not clearly defined and delineated, the entire project is put in jeopardy. 3. Lack of Transparency: Site selections involve a dizzying number of people, opinions, and professional insights that do not always align or connect in productive ways. Communication breakdowns can impact every level of the process, and result in costly mistakes that may require unbudgeted time and money to correct. Site selection teams must ensure that protocols are in place to guarantee all criteria are measured through objective facts and data. All human beings are fallible, so site selection teams must follow strict guidelines that protect the integrity and transparency of data sources, research procedures, and the dissemination and analysis of information. 4. Incomplete Research: Site selections impact an extensive spectrum of stakeholders, and each of them must be carefully consulted. Most instances of incomplete research are the result of failing to solicit the full involvement of all of the stakeholders—and not just the readily obvious ones. In addition to the decision-makers and inhabitants of host nations and municipalities and their respective regulatory bodies, site selection teams must consider neighboring municipalities, labor and economic development organizations, and other relevant community, political, or industry groups. Addressing the priorities of these stakeholders early on is key to a successful site selection. 5. Underestimating Full Operational Impact: Site selection is a resource-intensive endeavor, and it is easy for companies to underestimate the full impact the process can have on existing priorities and operations. Even the smallest reallocation of human capital, technology, or other assets can reverberate throughout a company and its external partners in ways that disrupt important routines and relationships. Before initiating the site selection process, companies should perform a stress test that identifies the people and processes most likely to be impacted by site selection procedures. 6. Inadequate Oversight: Effective leadership is key to running a successful site selection project. The numerous groups and individuals that contribute to site selection decisions make the operation highly susceptible to workflow silos, data fragmentation, and neglected performance benchmarks. Site selection teams must have an entity responsible for accountability on every level—from defining requirements and evaluating communities to tax/real estate analysis and the final site acquisition. Oversight mechanisms must be implemented from the very beginning to prevent corrupted data or processes from contaminating ensuing discussions and decisions. 7. Brand Integrity: Expanding operations to increase a financial services firm’s global footprint is a very public, costly, and high-profile pursuit. News of a site selection failure quickly spreads throughout the industry, and across the world. Financial services firms that “get it wrong” suffer catastrophic damage to their brand identity, and become associated with perceptions of incompetence, poor management, and bad decision making. Site selection teams should work with media companies to lead the narrative regarding the efficacy and benefits of the site selection. Firms that “get it right” elevate their brand above the competition and can build future business and profits based on a well-orchestrated site selection operation. In conclusion, financial services firms must remember that each site selection project is a singular endeavor that will require flexibility, foresight, and a willingness to learn. Using the same strategies and asking the same general questions is a recipe for failure. However, implementing an unbiased, dynamic, and comprehensive strategy will identify challenges early on, enable realistic solutions, and optimize the entire process. Situational awareness must be observed at all times, from every member of the team. After all, successful site selections are the ones where people take precedence over the place.