Can you make it in Mexico?

The time is now to decide how--and if--your company will fit into the U.S./Mexican trade alliance. Test your ability to adapt with this inside look at the rules of the game.

As the 20th century draws to a close, the headlines are filled with stories of change. Former Communist countries struggle to shift to a market-based system while the European markets grapple with unification. At the same time, competitive pressures intensify in a now global marketplace.

In this economic and political context, many U.S. companies with international intentions look toward Mexico. And the timing is right. Overall, there's growing confidence in the kind of opportunity Mexico offers foreign businesses, particularly U.S. businesses. Improvements in the Mexican economic, social and political climate have created a more favorable business environment for U.S. companies.

These improvements have brought about macroeconomic stability and fewer trade restrictions, accelerated privatization programs and created a booming stock market. Mexico's GDP growth has boosted market demand for goods and services, and the country has enjoyed political stability for more than 65 years. These circumstances, events and conditions have helped to improve Mexico's status as a world trading partner.

Success in Mexico isn't guaranteed, however. Prosperity for foreign companies will depend on a variety of factors, including, perhaps most importantly, their willingness to rethink and then to reshape business interaction styles.

BRIDGING THE U.S.-MEXICO CULTURAL GAP

Culture influences many aspects of business attitudes and behavior including basic work values, motivation, business socializing, making and keeping commitments, and more. What makes doing business in Mexico truly different from doing business in the United States are two distinct codes of business behavior, embedded in the American and Mexican cultures.

Eva S. Kras, in her book, Management in Two Cultures, looks at the Mexican CFO of an American operation in Mexico who recently made these comments on American business skills and protocol: "I have great admiration for the technological knowledge and administrative skills of the North Americans. However, when they attempt to impose their methods on us, incredible problems arise and we all feel frustrated and resentful, but don't know what to do about it. In my experience, the U.S. executive seems to be a cold, impersonal, discourteous and critical individual. His main objective seems to be dehumanize business as much as possible and to convert people into robots."

Kras continues that, when speaking of a particular American manager on assignment at this operation, the Mexican CFO comments, "What a boring life he must have. ... He seems to feel that all errors require instant criticism and are mostly inexcusable. He said once that personal feelings are not important and that we must learn to overcome our sensitivity to criticism. We just couldn't believe what we heard. I personally cannot accept the undiplomatic handling of inevitable occasional mistakes. None of us envies him or his lifestyle which seems to involve nothing but work with very little time for leisure. In fact, the only conversation that takes place between him and the managers involves some aspect of work. After all, what is life worth if one does not have time to enjoy with family and friends?"

This CFO's disbelief and discomfort typify the Mexican response to Americans' less personal, "let's-get-right-down-to-business" approach. There are other examples of the differences between the American and Mexican processes: Mexicans are highly sensitive to criticism and think it inappropriate in many ways. Mexican managers are often more autocratic, delegating much less often than American managers. Formality is very important, particularly in the initial stages of a business relationship.

Experience has shown me that success in Mexico hinges on adequate handling of these and other cultural contrasts. When basic cultural differences between Americans and Mexicans are misunderstood or ignored, the resulting communication gap causes road blocks, wastes time and resources and hampers productivity. In some extreme cases, it may even mean lost customers or business partners.

This means that instilling in American managers and workers an awareness of and sensitivity to Mexican culture and its influence on business protocol is pivotal to success in Mexico. As an example, the American "cut-to-the-chase" modus operandi, perhaps one of the most prevalent causes of resentment from Mexican managers dealing with American subordinates, peers or bosses, must be subdued in dealings with Mexican bosses, peers or subordinates.

NINE TIPS FOR MAKING FRIENDS FAST

Since understanding is the first step toward bridging the cultural gap, awareness of the differences in Mexican and American styles is critical to the development of a productive business relationship between Americans and Mexicans.

I believe there are nine cultural factors that influence business protocol and interaction in Mexico. I've adapted these factors from Eva Kras' work, adding my own perspective based on my experiences:

1. Leadership Style. Mexican managers tend to be more autocratic and to delegate less responsibility and authority than Americans. The boss's opinion is less openly questioned. Accordingly, Mexicans may perceive Americans as lacking respect for authority, while Americans may think Mexicans lack initiative and accountability.

2. Loyalty. In Mexico, loyalty is related to a personal bond between boss and subordinate or between peers, and it is very important. In selecting personnel, loyalty, or the potential to build it, is as important as experience and professional qualifications.

Americans are perceived as being more loyal to themselves than to a boss or to the organization. This difference can make it difficult to establish a comfortable degree of loyalty between a Mexican manager and an American subordinate. Lack of understanding of this factor by American managers working in Mexico may result in staffing and team building problems.

3. Social Status. Title and recognized position are often more important to Mexicans than money. This is especially true when one reaches a certain stage in one's financial position. It's also one of the key reasons Mexicans are sensitive to criticism within view and earshot of others.

4. Formality. Formality is usually important, but it's even more important when initiating a business relationship. Mexicans view formality as a means to recognizing the social status of another person. It's also shaded with a measure of breeding, education and background. Overlooking the importance of formality may bring with it rejection and barriers to communication.

5. Relating to Others in the Business Environment. This is perhaps one of the most frequent causes of resentment from Mexican managers dealing with their American subordinates, peers or bosses. The conflict stems from the Mexican "diplomatic" approach and extreme sensitivity to criticism, especially criticism delivered in a public forum. This aversion stems from the Mexican perception that saving face is important in a close-knit society, where a person's reputation among colleagues is at stake.

6. Time Perception. A time commitment is kept as an imperative by Americans, but as something relative and contingent upon circumstances by Mexicans. The Mexican predilection may be related to tradition, inefficient systems, or to the need to respond to a less structured and more uncertain environment.

7. View on Work. Americans view work with greater intensity than do Mexicans, who have a more relaxed perspective on work. They "work to live" while Americans "live to work," as the saying goes.

8. Empathy. It is difficult for a Mexican to do business with any person he doesn't like, either another Mexican or a foreigner. There are expressions like "having the right chemistry" with your partner, peer or boss, or "clicking" with that person, and these expressions describe the importance of the empathy factor for a successful business relationship in Mexico. Trust is fundamental for the business relationship to succeed, and empathy certainly helps to build trust. Respect and honesty have to be present.

9. Family Relations. For Mexicans, family is usually more of a priority than work. For example, Mexicans tend to be resistant to the idea of relocating for a job if it means separation from family. That's useful to understand if you're thinking of relocating a Mexican within or outside of Mexico.

This is not to suggest that only one style works in Mexico or that only one set of values prevails, but rather to use generalizations to make a point: While there are significant regional differences in management styles from northern Mexico to Monterrey and from Mexico City and Guadalajara to southeast Mexico, Mexican values are similar throughout these regions, and sensitivity to these values is key to the success of foreign operations.

AT&T MEXICO'S STORY

AT&T began a vigorous expansion in Mexico in 1987. From a staff of three in 1987, AT&T Mexico grew to 4,000 employees by the end of 1992. And, although we realize AT&T must continue to improve its understanding of the Mexican culture and how that culture shapes the business environment in Mexico, the reasons for our early success may be enlightening for other organizations. Following are descriptions of some of the methods that were instrumental to the success of AT&T Mexico:

* Select the right people to work in Mexico. In addition to having the right skills and experience, the right people are those who are genuinely and sincerely interested in the Mexican culture. They will possess human relations skills and will be flexible enough to handle the inevitable frustration that will result from working in a more uncertain and less organized environment.

* Provide intensive cross-cultural training. This training need also applies to the Mexicans who are going to be dealing with the Americans. Cross-cultural training starts with an awareness of many of the differences I've described. Awareness brings with it understanding and better communication, the tools and skills to deal with frustration and so on.

* Urge American managers and workers to travel and to socialize within the Mexican community. You should even encourage employees to consider living outside American neighborhoods. In any event, they shouldn't confine their activities to the close-knit American neighborhoods, but rather attend luncheons, sports, parties and other events with the locals. The more they expand their social activities, the better their cultural understanding will be. This has implications not only for their dealings with coworkers but for their dealings with customers as well.

* Encourage American managers and workers to learn the language. Knowing only English does not really present a problem in Mexico in general, particularly at higher levels in the organization. But it does become a problem as you move "down the ladder." I've been in meetings during which a single interpretation in one translation has brought with it an outburst and fights. So language is a productivity issue.

Also, when Mexicans perceive that an American is making an effort to become familiar with the language, they perceive that American as interested and respectful.

* Give locals top positions in the company; place as few Americans as possible in the operation. Having locals in top positions helps the operation to become part of the Mexican business community much faster. In addition, if you build the right work force with the right managerial capacity, you won't need more than three or four Americans in a 4,000- to 10,000-employee work force. Obviously this will require a lot of traveling and video conferencing for those Americans, but this technique can really improve the effectiveness of the entire operation.

* Keep in mind the critical importance of becoming familiar with the government community as well as the business community.

In my view, the expression "Think globally, act locally," one I heard not too long ago, does the greatest justice to the integral role cultural awareness plays in the success of foreign companies in Mexico, or in any country. International aspirations and strategic plans are helpful, even laudable, but success will be limited or enhanced by cultural awareness and sensitivity. An American operation's effectiveness will depend on its ability to demonstrate, largely through the behavior of its employees, that the company is a concerned, interested and courteous guest with something worthwhile to offer the local and national Mexican economy.

A LOOK AT THE HOT SPOTS SOUTH OF THE BORDER

Choosing the optimum location for your Mexican operation, one that meets your specific goals, is of course as integral to success as cultural understanding. There are three primary business regions within Mexico, each with a distinct set of qualities and style of doing business:

* The Mexico City metropolitan area has a cosmopolitan, executive culture. European and Japanese businesses are also present. The management style is a blend of the American aggressiveness and a more "composed" Mexican style.

* Northern Mexico's Monterrey is the country's second largest business center. Its business environment is perhaps the most similar to that of the United States. I characterize it as aggressive, direct to the point--and very easy for American operations to blend into.

* Guadalajara has the second largest population in Mexico. In terms of industry, however, it is third to Monterrey. Its business community is comprised primarily of small and medium-sized companies, most of which are family-run.

Recently, however, several established companies, including some large multinationals and companies that have purchased local businesses, have arrived in Guadalajara. This area's executive culture is conservative and easygoing. In general, the business style is less aggressive than either Monterrey's or Mexico City's.