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The Cost of Cultural Misunderstanding

Up, over and down is about just one fundamental difference in how conflict is resolved in the American and in the German business contexts. Stated simply: Americans escalate conflict rather quickly. The next management level gets directly involved. In Germany it is the opposite.

If you work in the USA-Germany business space, this little story should ring a bell. It will be familiar to you. You most likely will have experienced or observed some version of it in your work.

And this difference - escalation - is just one fundamental difference. There are more: How the two business cultures handle a hearing of the conflict parties; which types of evidence are considered; how quickly they attempt to resolve conflict; and finally what is necessary so that the resolution is accepted by both parties, and therefore lasting.

Resolving conflicts within and between organizations is absolutely critical to success. If there are fundamental differences between business cultures, and these are neither known nor understood, overall success is threatened.

Let's try to estimate that threat to success. Let's put some numbers on it.

Conflict Not Resolved
You know your organization. Think of a recent major conflict either within the organization or between it and another organization. Or imagine such a conflict. What would be the negative finanical impact - in dollars or in euros - if the conflict goes unresolved?

Resolution Rejected
Another calculation. What would occur if a resolution to the major conflict above was considered by the one side to be unjust, unworkable, or simply bad for the company? Surely they would do everything in their power to have the resolution overturned, to fight it secretly, or to ignore it.

What would any of those scenarios cost the organization?

Let's assume again that the one side considers the resolution to be unjust, unworkable, or simply bad for the company. But they are forced to live with it, and it impacts negatively motivation, productivity, and the willingness to collaborate across the Atlantic.

What would a 5% loss in productivity cost the organization - in dollars or in euros?

Are we missing anything?