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Cross Cultural Communications

1480403 - Kristian Gonzalez
1480479 - Denisse Macias

Grupo Financiero Inverlat – Case Study Report

1. How would you describe the communications climate at Inverlat?

Since Grupo Financiero Inverlat had been traditionally run like it is 8 different regional banks, or
“fiefdoms” with separate “feudal” lords (managers) that run the business, the communication had
been fragmented because it was decentralized and the bank managers were not communicating with
one another and unsupportive of one another. This is evidenced by the attitude that the employees
had, as a result of the separation of each bank as an autonomous unit, as “the power struggle within
the regions demanded such loyalty that employees often had to say: “I cannot support you (in some
initiative) because my boss told me not to.”

However, after BNS had purchased a large stake in Inverlat for $154m, the BNS culture became
more pervasive and Inverlat had absorbed much of this cultural shift from a localized Mexican style
to a bilingual and western culture, as well as adapt to Canadian behaviors of influence. These cultural
shifts, including a change of management- also indirectly changed the communications climate for
Inverlat and allowed some of the culture to additionally allow Canadian BNS managers to become
more bilingually-aware, since management had been primarily Mexican (bilingual-speaking).

Two types of communication were present in the bilingual Inverlat climate, based on the
Canadian and Mexican management and their respective individual style/behavior:

1> Mexican management style – expressed a polite, free, informal style of communication and
during managerial meetings they could get up and move about, and engage in side conversations.

▪ Mexican management would speak English during meetings with other senior Canadian
managers and afterwards communicate in their own native Spanish with their Mexican
▪ This is when they discovered that they had interpreted the messages from the other
Canadian managers incorrectly along with the factor of bias in their perceptions, or hearing
what they had wanted to hear based on events during meetings

2> Canadian management style – expressed strict, direct, and formal style of communication that
was abrupt in manner. They were more “disciplined” which meant that they took more
infrequent breaks during meetings, which they had under tight controls. Also, since they had
not been formally trained in Spanish previously, they had to communicate with interpreters
frequently and through senior management officials with the Inverlat employees, making them
feel like “dictators”.

▪ Canadian management changed the style of communication with Mexican managers due to
their own frustration, from what they knew in Canada, to get a more “productive” result.
▪ The Canadian discipline of meetings and communication was inflexible in style and did not
allow the original informal style in meetings of the Mexican managers to remain. This
offended Mexican managers, made the Canadians seem rigid and worked in the opposite
expected result.

2. Who are Inverlat’s Key stakeholders? What are their communications priorities and needs?
Pages 150 (in book) and up might help you answer this question.

Financial ownership of Inverlat:

In 1996, Inverlat’s primary financial stakeholder is the Mexican government, which owns the
majority of shares of the financial institution (C$213.88m, 84%), with BNS(as contractor /
manager) owning a minority stake of 16% or C$50m. That would change to a majority stake of
55% or C$125m in convertible bonds in March of 2000, if BNS chose to assume ownership of
Inverlat, but if they chose not to assume it- they would not convert the debt and be responsible
for the bank operations and management..

Key ownership of Inverlat:

▪ Inverlat’s key stakeholders are primarily their Mexican employees and management , guided
by the Senior BNS executive staff– this is undisputed, as the Canadian executives are
accountable for Inverlat, and own and determine the company’s success.

Inverlat has the following makeup or characteristics of key stakeholders (accountable
Inverlat employees):

▪ Of 175 Senior level executives (DGAs) according to the case -
o 16 Sr. executives (DGAs or Directores Generales Adjuntos) are Canadian (imported
from Canada and operating in Mexico)
o 159 are Mexican nationals (from Mexico city and other native cities)
o ~8000 employees
o 4 Geographic regions in Mexico (reduced from 8)

More important to the success for the firm is the ability for the BNS managers to properly
integrate with the Mexican managers of Inverlat. They need one another to survive the
economically challenging environment for the bank and this requires a change in cultural
intelligence. In order to adapt, Jim O’Donnell needs to impart a twofold strategy to integrate
his management into the Mexican mode of doing business while ensuring that the Mexican
managers will meet a great measure of success from the outcomes:

Establish an overall go-forward plan to restore “financial health” or get-well plan for Inverlat
involving the following measures-

▪ Establish clear financial goals through restructuring– Jim needs the 159 managers to
understand the financial goals of the business and lead change.
o Provide communication to Mexican managers and employees up-front (staff
reductions may/will occur).
o Would need to implement staff reductions to maintain positive profitability; cut
weak performing managers who didn’t attain financial goals within 3 months (1
quarter period) – this includes Canadian executives.
o Promote to senior leadership bilingual Mexican managers who understood western
cultural as well as native cultural norms.
o Provide along with the reduction rate for Mexican managers 30 days to complete a
transition to employment/roles outside of Inverlat.
o Increase the quarterly bonus / incentives for high performers.
o Provide an incentive framework for Mexican management (high performers) to
advance to senior leadership by meeting quarterly financial goals.

▪ Establish framework for cultural integration and advance cultural intelligence through
mutual understanding:
o Make a group of Canadian executives report to Mexican executives for a quarter-
role reversal (Equity increases Cultural awareness).
o Implement mandatory Spanish-speaking program for all Senior Canadian staff and
graduate them (Assimilate into Mexican culture by integration).
o Make the meeting rules/leadership run by the Mexican management and according
to the informal style of the Mexican management and have the Canadians interpret
what is being done (Accommodation of cultural norms increases CI).
o Avoid stereotypes and build relationships with the Mexican managers for long-term

3. What communications decisions must Jim O’Donnell make for the short term and the long
term to facilitate Inverlat’s business strategy and success?

For the short term, Jim needs to implement the following changes to the mode of communication:

▪ Effective Managers will be mixed with direct reports
o Sr. Exec Canadian staff will have direct reports of Mexican employees, and Mexican
Sr. leadership that have demonstrated efficiency will have Canadian executive
management reporting to them.
o This will ensure that the managers have to learn to cope and deal with the nuances /
differences of communication and norms or their culturally different employees and
allow them to learn from and increase tolerance in one another.

▪ Matrix – Flat Accountability
o Jim would change the structure of accountability to one that would allow Mexicans
to be loyal to Canadian managers and vice-versa by adhering to common and
centralized short-term goals of cultural integration. Incentivize employees as
necessary for meeting metrics.

▪ Ensure Coaching / Training through consolidation and direct regular communication
o Mexican managers will be coached by their Western executive counterparts as their
Product management roles are consolidated from various groups into centralized
accountable lines of authority; not for influence or control but to understand how to
operate in a centralized communication framework.
o Make communication less hierarchical and facilitate open meetings between Sr.
levels of staff with lower levels of staff.

For the long-term, Jim needs to ensure that responsible managers are following transitions to an
open, centralized framework by changing communications:

▪ Reporting hierarchy is diminished; teams of 3 or higher levels will be reduced to 2 levels
▪ Provide a minimum 1 month notice of all leadership transitions, face-to-face communication
with staff meeting mandatory.
▪ Cross-cultural meetings need to be encouraged along with language and situational and
context training workshops; bonus incentives provided for most amount of bilingual
employees successful in the workshops.
▪ Train the Mexican management in areas of confrontation by communication, and of its
acceptability, but do it with politeness.
▪ Ensure that direct critical feedback is provided to Mexican employees by Sr. managers in
private; discouraging joking about it to be culturally sensitive to Mexican cohorts in front of
their staff.
▪ Adapt to Mexican style of meetings with periodic breaks every 30 mins., allowing the
Mexican managers to communicate through white-boarding as well as other non-verbal
means to avoid context confusion.

4. If you were Jim O’Donnell, what would you do to show that you are trustworthy?

There are many ways for Jim to establish trust with the Inverlat employees. Most notably,
the trust will be gained by showing trust in assimilating into the different cultural established norms
of the Mexican way of doing business, understanding the method of openness that needs to be made
with the Mexican employees, and “eliminate the noise” to be open about changes impacting the
business from management and encourage regular Q&A meetings (monthly) of employees with
senior leadership. It is clear that the Canadian forms, style and mode of business will need to take a
backseat to the Mexican style of meetings and communication.

▪ Give the Mexican managers who are capable doers and performers more authority and allow
them to obtain opportunities to ascend to senior leadership
▪ Communicate directly, politely and informally– always provide direct communication in
Spanish to Mexican management; this would ensure relational acceptance and impress the
Mexicans of the efforts involved as well as build trust and respect from subordinates
▪ Increase understanding of cultural norms and eliminate barriers that prevent them; ensure
Canadian management adapts more to the Mexican style, rather than the other way around.
Ensure that the Canadian management accepts Mexican norms and they are used while
imparting the business training.
▪ Ensure all employees are committed to the “get-well-plan” by making it a goal to give each
employee a sense of ownership of the business. Make groups accountable by assigning
realizable but reachable financial and productivity goals giving the responsible group a
fraction of bonus money earned based on percentage of financial growth revenue targets hit
on a quarterly basis.
▪ Reward the employees at all levels – this would give senior DGA (by Canadian) leadership a
less austere reputation and allow Jim to provide rewards to lower-level Mexican nationals.

Acknowledgements and Further Cultural Understanding

Mexico is an extremely conservative country. It is no surprise that the Canadian team did not
place any females as Directores Generales Adjuntos. Social taboos placed on women remain a
troubling issue in the work place. Sexual harassment and disrespect is abundant in positions of
power, this would have complicated and clouded the communication climate at Inverlat even further.
Mexico is a country where time is irrelevant to a certain extent. If a meeting is said to start at
1:00 pm that is merely a marker of when to gather. For many it is disrespectful not to be on time but
this is indeed a way of business in the country. For any foreign investors this can be the cause of
miscommunication as well. While the foreign counterpart views it as a sign of bad business, Mexicans
view it as a normal way of living life at a slower pace. Hence there is siesta time during working
hours in the country. There is a break lapse in business hours, offices close between 1:00-5:00 pm.

The banking industry is one that even up to date struggles to capture a wider range of
customers, due to the conservative nature of the people. People still prefer to hide money under the
mattress due to the distrust of the financial institutions. It is no wonder that Inverlat employees
lived in constant distrust.
The population and business in Mexico is one that has always experienced the same
structure, always an oppressing power controlling the majority. From invasion and colonization of
the Spaniards, Dictatorship of Porfirio Diaz to PRI (Partido Revolucionario Institucional) who
remained in power for more than 71 years. During the Presidency of Lopez Portillo, who belonged to
PRI the dominating political party of Mexico, foreign investment was on the rise, President Portillo
had set programs to aid the Mexican economy by expanding the oil exports. Oil was drilled out of
Veracruz and Tabasco and although this expanded rapidly it was a failure on his presidency due to
the high corruption and distribution of money only to high ranking union officials and government.
Diaz was known for his famous quote: “Defendere el peso como un perro” - “I will defend the peso
like a dog”. Only to see the peso devaluation at its lowest by the end of his presidency term.