A country, known for its possibilities, is also one of significant contradictions. Its love and hate relationship with a large part of the world’s population contributes to the enormous impact it has on people, good and bad. The United States of America is one of the most powerful countries in the world and has one of the largest, most robust economies. The US plays a leading role in the world because of the size of the economy, making it an interesting place to do business. In this chapter we provide an introduction to American culture and highlight some of the commonalities in negotiation.
Country specific communication
Americans are very punctual and therefore scheduled meetings and appointments must be attended on time. Lateness will be seen as disrespectful. A counter side to the American Dream is the concept that ‘Time is Money’. It therefore may be your experience that your counterparts appear hasty in their decision-making. They want the best possible result in the shortest possible time. Generally in the USA the working week consists of Monday to Friday, 9 to 5. However, in line with the strong American work ethic, the majority of Americans work long hours and overtime. It is also customary to take as few as ten days holiday per year. Individualism: a key word for an average American as it plays a significant role in the lives of many Americans. American culture emphasises individual initiative and personal achievement. Independence and self-reliance are highly valued and this also extends to the workplace where business is frequently carried out autonomously. Consequently, one’s position in US society is determined by one’s own achievements as oppose to status or age.
American culture could be described as a ‘low context’ culture meaning that communication is direct and to the point. Efficiency in information flow is explicit through words. The main reason for communication is to exchange information, facts or opinions. American are also extremely direct socially. A conflict is dealt with in a direct and open manner. They have no problem with saying “no”. This method of communication is quite difficult to understand for people from a ‘high context’ culture. In a first meeting, American behaviour may be thought of as overwhelming, but it shouldn’t be taken personally; it is just the way of negotiating. The intention is not to attack anyone on a personal level.
Another very important point is that Americans believe in equality. Despite the perceived differences in American society, there is a common understanding of equality. They want every person to have equal rights, social obligations and opportunities. The other side of this coin is that there is a general lack of people with a higher social status. This is exemplified in the fact that that an American seldom uses business titles and call each other by first names. This belief in equal opportunities and the pursuit of the ‘American Dream’ is the root of competition in the hierarchy displaying a clear distinction between management and subordinates.
Management or hierarchy characteristics
Organisations and structures of companies may differ according to such factors as region or history of industry. However, hierarchy is very important in American companies and normally a great deal of respect for different levels of hierarchy will be evident. When doing business with an American company it is best to know the titles and operating levels of all contacts. People in the USA tend to focus on the title and less on the person holding the title. A person’s ability to perform is valued more highly than their seniority.
Many Americans tend to act informally, even quite soon after initial introductions. They use first names easily and discuss personal details which they use to evaluate your status and standing. Personal status is often defined by material possessions. In the USA, for example, driving a Ferrari can be seen as a sign of success, whereas in certain cultures this might be seen as showing off. The use of humour in a negotiation is acceptable and can be used to diffuse a challenging conversation.
When doing business it’s best to deal with the chief authority because that’s the person who makes the final decision. The existence of one chief authority means that team negotiations are used mainly for preliminary discussions. Americans tend to work toward a joint problem-solving process for a mutually beneficial result. In this situation the buyer is often in a superior position. American negotiators will spend time gathering information before they start the negotiations. Asking for potentially sensitive details during negotiations is not seen as unusual and both parties may do so, but are not expected to answer all the questions. However, not answering will be interpreted as an answer in itself. Americans work in a monochromic way; they often have a list they will work from, bargaining on every point. They want to do the negotiations as efficiently as possible, but they are not afraid to use stalling techniques in order to obtain concession. Bargaining is an acceptable negotiation technique in the USA. They will take firm positions at the beginning of the process, but are willing to give in if the other party does not give in on its own position.
Contracts, legal concepts
After the negotiations, it is normal to exchange meeting summaries. It is also possible that negotiators decide on a Letter of Intent (LOI) or a Memorandum of Understanding (MOU), stating that both parties will do business if certain points of competencies are met. These are much weaker as contracts, but still have some legal precedents. Contracts on the contrary are legally binding. All details are evaluated and the terms and conditions of every detail are outlined in very specific terms. All commitments, events, terms and conditions can only be changed when all parties mutually agree in writing. If one end of a contract is not upheld, legal actions and excusive claims will be taken. It is therefore highly advisable to consult a (local) legal adviser before signing a contract. This legal counsel also may take part in the negotiations. If you elect to do this, it is advisable to also inform the other party that your legal counsel will be present during the negotiations, in which case the other party will quite possibly do the same.
Structure and hierarchy in American companies
In a country famous for its individualism and diversity, the organisation and structure of companies within the USA may differ according to the industry, region or company history. However, you will generally find that office hierarchy within an American company is extremely important. Therefore, it is advised to learn the ranks and titles of all members of the organisation. Negotiations and final decisions in the US are frequently made by one person who has chief authority. Team negotiations are rarely carried out in American companies. In accordance with American business culture, the hierarchical chain of command often supersedes personal relationships.
Personal competence, professionalism and accountability for individual performance are highly valued in the American business culture. As a result, managers are only approached for help in essential situations. These concepts also contribute to the highly competitive work ethic which is often experienced in the US. Developing personal relationships are not as significant in US business culture as they are in some Asian countries. In the United States, the overall goal of business is to secure the best deal. Therefore forming company relationships are of greater value. It is common for Americans to make clear distinctions between work colleagues and friends in their social life. In the US, meetings tend to be rather formal and little time is spent on cultivating social relationships.
Authors: Jasper van der Heiden & Thomas Steetskamp