Global Mindset Part II

An example:  you are an expatriate manager of a multinational company in a Middle Eastern country  and you have just found out that no women are allowed to even apply for certain jobs in your department.  You say to yourself, “I just don’t get it.”  Another example:  an executive who works with Korean nationals once expressed his frustration to me that Koreans will never tell you what they really think.  “Why can’t they just be candid like Americans?”

I could give many more examples to illustrate reactions to differences in cross-cultural management practices that suggest a gap in global mindset, especially in one aspect:  that of developing empathy, which suggests an ability (and willingness) to understand another person’s or group’s perspective.  Actually, lots of research suggests that this skill differentiates effective negotiators from average ones.  For managers working cross-culturally, I believe that this “perspective-taking” skill is critical.  As two researchers from the University of Chicago (Epley and Caruso, 2008) have stated, “… the ability to accurately adopt someone’s perspective is better than chance but less than perfect.”  They point to three barriers, which I will paraphrase here. 

            

The first barrier is “activating” or switching on in our minds a willingness to do this.  As managers and leaders of global teams, this is sometimes difficult to do when there are so many mental balls that we are juggling.  And if we have not even made the effort to learn about other cultures, or to recognize that our way is not the only way, switching mentally to consider practices from another person’s perspective will be tough.  Our default mode is our own perspective, our own way of viewing things.    

The second barrier is our natural tendency is to react to things from our own perspective.  In one experiment which they cite, participants were asked to send either sincere or sarcastic messages to another participant, either over the telephone or via e-mail.  They were asked to predict, for each of 10 sincere and 10 sarcastic messages, whether the recipient would interpret the message correctly or incorrectly.  Recipients were not significantly better than chance at distinguishing between sarcasm and sincerity over e-mail, but not surprisingly, were significantly more accurate over the telephone.  But the senders did not think there would be any difference in the recipients’ accuracy when communicating over e-mail or the telephone.  “The senders’ intentions to communicate sarcasm or sincerity were so clear that it rendered them unable to appreciate … that the perception of the person on the other end of the computer monitor would be very different from the person on the other end of the telephone.” 

From my experience, I can recall many times when executives say they don’t understand why their messages are not being understood, or are being misinterpreted by employees.  If the executive working with Korean nationals has asked them for their opinions and they don’t give him any, it must be because they prefer not being candid!  The perspective that in some cultures, authority is so respected that voicing an opinion is tantamount to challenging the boss, is not something that would occur right away to this executive.           

Third, if we do recognize that we need to understand another person’s perspective, our ability to do this may depend on whether we believe that person is similar to us or not.  In either case, this may lead to problems.  Let’s say that you are a manager for a global company working with a group of Japanese employees in the Tokyo subsidiary.  You could make the assumption that because these employees belong to the same company as you they should react similarly to you.  Or you could make the assumption that because these employees are Japanese, they will react based on your “stored knowledge” of what Japanese are like – which may or may not be accurate.  Each of these assumptions will not necessarily reflect the Japanese employees’ perspectives.

I was recently in Singapore to teach a class in Global Leadership to a group of intelligent and experienced Asian executives, most of whom have regional roles working in global companies.  One of their challenges is in managing within a matrix environment and convincing senior management that certain global policies and strategies might have to be adapted for different markets.  In discussing their situation, we had a productive dialogue in looking at the situation from the senior managers’ perspective – what could be going on in their minds, what might be driving their behavior?              

Although empathy and perspective-taking are sometimes difficult, developing this skill can be learned through practice and mindfulness.  I have three simple suggestions.  One, get to know the other person or group better, as well as their cultures.  By doing this, you will minimize your tendency to stereotype.  Second, learn to describe first before judging.  We have a quick tendency to evaluate based on first impressions.  But in cross-cultural situations, what you see is often not what you get, because our observations are filtered through our own cultural frame of reference.  And third, try to reflect on what is going on and what might be causing the behavior.    

So for the expatriate manager and the executive working with Korean nationals, learning about the local cultures might give them insight into why these practices exist.  It does not mean accepting these practices, but it may mean developing alternative approaches.  The executive working with Korean nationals, recognizing that he is an authority figure, might put more effort in asking specific questions rather than asking them generally for their opinion.  Ultimately the benefit of developing empathy and of having a global mindset will help you become a more effective global leader.      

 

Epley, N. and Caruso, E.  (2008).  Perspective taking:  misstepping into others’ shoes.  In K. D. Markman et al. (Eds.), Handbook of Imagination and Mental Simulation.  New York:  Psychology Press.

Global Mindset Part I

Larry Parker (not his real name) was a marketing executive for the Asia Pacific division of a multi-national company.  He would hold regular teleconferences with his marketing directors in Asia and, according to him, he found it difficult to make much progress with them.  Asking for my advice, he commented, “Why is it that when I tell them that they need to meet a certain deliverable by a certain time, they all say they will do it, and yet nothing happens by the deadline.  I can never tell if they have agreed to do something or not.  Why can’t they just be straight with me?”

Does Larry have what many management experts are calling “global mindset?”  What is global mindset, anyway?  How do we know when someone has it?  Professors Anil Gupta and Vijay Govindarajan define global mindset as “combin(ing) openness to and awareness of diversity across cultures and markets with a propensity and ability to synthesize across this diversity.”  And The Thunderbird School of Management says that global mindset is made up of your:  intellectual capital (e.g., your global business savvy, your cosmopolitan outlook), psychological capital (e.g., your passion for diversity, your quest for adventure), and social capital (e.g., your intercultural empathy, your diplomacy).    

These are certainly reasonable.  As implied, global mindset is a mental attitude, an inclination.  It is not a behavior, but it should predict behavior.  In my own experience and interviews with executives and students, I would say there are four components which can be easily remembered with the acronym FACE:  Flexibility, Acceptance/openness, Curiosity, and cross-cultural Empathy.

I asked my students near the beginning of my course in Cross-Cultural Management to describe what global mindset means to them.  Here is a sampling of what they wrote:   

“Global mindset means that you are aware of your environment, of others and the impact of ideas and events in your business, strategy or position.”

“Taking a more macro look at things … understanding that things won’t work the same all over the world, and taking that into account.”

“Having an understanding that countries have different cultures, and going into each country, one must always be aware and sensitive to that country’s cultural ways.”

 “Someone who understands or has an open mind to understand different cultures and how these affect the outcomes of decisions.”

“Putting yourself in the other culture’s shoes.”

“Listening and resisting reflexive judgments.”

“Your way is not always the right way.”

“Understanding that different countries/cultures have different ways of doing things.  They value certain things differently.  A global mindset has to take all of that into consideration and be open-minded and willing to compromise.” 

When I asked Larry (a mid-westerner who had only begun to travel to Asia) what he thought was going on, he said that it was either because Asians don’t have the same sense of urgency as Westerners, and/or that they are not as candid.  Six months later, Larry requested a transfer from his position and eventually moved to a staff job in headquarters.

We can reasonably assume that Larry did not have a global mindset and was perhaps a poor fit in his global role.  He showed little curiosity for the geography he was managing, was not willing to explore other ways to accomplish his objectives, and could not imagine viewing things from his direct reports’ perspective.      

Developing a global mindset, on the other hand, is not easy.  Traveling to other countries, or reading about different cultures, may help, but is not sufficient.  And of the four components, developing inter-cultural empathy is probably the most difficult.  In a subsequent article, I will explain why, and also some of the ways you can develop global mindset.

The Leadership of Steve Jobs

By now, many of us have read, watched, and listened to many accounts of Steve Jobs’ many contributions can achievements.  There is a passion from consumers about Apple and Steve Jobs that is rare in the corporate world.  Not long ago, I walked past an Apple store in Soho and saw hundreds of Post-It notes and flowers from so many thanking Steve Jobs.  As his biographer Walter Isaacson and others have pointed out, however, Steve Jobs was far from perfect.  I’d like to comment in particular on his leadership and management style.  It is well-known that Steve Jobs could be arrogant, dictatorial, and mean-spirited.  Yet he was a great leader.  So does this invalidate the claims of some management writers and thought leaders today that effective business leaders today need to be nice, kind, humble (Level 5 leadership), and practice “servant leadership?”  Does this mean that executive leaders should now not worry about being ruthless, imperial and aloof?

Not at all.  I think this apparent contradiction can be explained by two sets of factors.  One, we have to recognize that leadership style is situational.  A style that might work under some circumstances might not work in others.  Of course this concept has been around for years, but I am still surprised at the claims being made about “universal” leadership characteristics and behavior.  Those of you who have worked overseas and led cross-functional global teams will surely recognize that your leadership needs to be adapted to specific cultures.  I believe that Mr. Jobs’ leadership style (not to mention his genius in design) was a key ingredient in Apple’s success; had he used a different style, he might not have achieved the same spectacular results at Apple.

Two, despite the observations of some about Mr. Jobs’ arrogant style, I believe that he had at least three qualities that great executive leaders have:  a clear vision, a passion for the company and its people, and an ability to inspire trust.  This is what I would consider his leadership character.  In fact, Mr. Jobs not only had a vision, he made sure that everyone in the company bought into that vision, and this created a “higher purpose” for the company that really excited Apple employees.  Of course, his passion for the company and its products is legendary.  And employees trusted Mr. Jobs – not because he founded the company but because he showed time and again his competence in many areas, especially product design and marketing.  And because employees saw – through his behavior – that Mr. Jobs was not driven by his own ego or by some self-interested needs (like the outrageous pay packages of some executives), they trusted him.  So if Mr. Jobs was at times arrogant, even nasty, employees viewed these behaviors in the context of these underlying qualities.

I think the lessons for executives today are clear.  Leadership style is situational – your behavior can and should vary depending on circumstances.  What is important to consider is the character of your leadership.  Do you have a clear vision for your team or your company?  Do your team members believe in that vision, and are they excited enough to become part of the journey towards achieving that vision?  And do they trust you to do what is ultimately best for the company, the stakeholders, the customers, and employees – not what’s best for you?                      

 

Management Tools or Just Fads?

Some of you may remember when these management practices were in vogue: quality circles, Six Sigma, Business Process Reengineering, forced rankings. Indeed, over the years, business managers have embraced certain “best practices” that have turned into fads, but then they moved on to the next best thing. A few of these practices – like 360-degree feedback – have had staying power. But many have come and gone.

I was reminded of these fads when I read a book that David Burkus (2016) recently published, in which he describes 13 of the latest management tools. He does a good job summarizing what he calls this new set of management tools: “… the redesigned management tools … may seem odd, but they are effective. And decades of research in human psychology reveal why: they work because they are different and better. Indeed, their differentness strengthens the case that we need reinvention.” (p. 7)

What are these new tools and trends? He devotes a chapter to each one: Outlawing e-mail, putting customers second, losing the standard vacation policy, paying people to quit, making salaries transparent, banning noncompetes, ditching performance appraisals, hiring as a team, writing the org chart in pencil, closing open offices, taking sabbaticals, firing the managers, and celebrating departures. He also gives examples of companies that have apparently implemented these tools successfully, and he cites relevant research to demonstrate the effectiveness of these tools, while encouraging companies to continue experimenting with new tools and methods.

I agree with Burkus on the importance of experimentation with new tools. However, applying these tools uncritically may in fact tend to make them more like “flavors of the month” and fads rather than lasting practices. Professor Jeffrey Pfeffer has written extensively about the dangers of management fads (Pfeffer and Sutton, 2006), and he urges companies to answer some fundamental questions first. Building on his work, the following are questions that I would urge managers to answer before they decide to implement these other current management practices or tools:

  1. What is the objective or outcome that the company wants to achieve by implementing this practice or tool? Why are you even considering it? Be careful not to have a solution in search of a problem.
  2. Will the solution in fact address the problem that your company has or help achieve this outcome?
  3. What is the logic or evidence (other than anecdotal or some consultant’s recommendation) that this practice or tool is effective? Simply benchmarking is not sufficient since companies and industries differ significantly in terms of their context.
  4. Does the practice seem to fit with the current or desired culture? Of course, some practices are introduced precisely to signal a culture change. On the other hand, if the practice is so counter to the current culture, some groundwork needs to be laid first.
  5. What is the readiness level of the company to take on such a practice? Since research shows that the majority of change efforts fail, managers need to be careful that the conditions are in place for this practice to succeed, such as the capabilities of the workforce and managers, as well as the number of changes that the organization has absorbed (that may lead to change fatigue).
  6. What are the downsides of implementing the practice even if it is a good idea overall? What are some major unintended consequences?

Let’s take two of these practices and examine each more carefully. The first is his recommendation to make salary transparent. Some companies have tried this while many are reluctant. There is no question that in this day and age, companies need to be more forthcoming about their pay practices. At the very least, that means communicating clearly to employees what the company’s compensation philosophy is, and how pay is set throughout the organization, e.g., salary ranges for different levels. There are organizations (such as branches of government) where employees know everyone’s salaries because the criteria for pay and promotions are based on tenure and rank – not performance. In some types of sales, the commissions that salespersons make are also well known. However, in the vast majority of organizations that are trying to establish a meritocracy, the challenges for total salary transparency are enormous. So far, the evidence for the effectiveness of full pay transparency is anecdotal. Companies also need to consider the downsides or unintended consequences of implementing such a practice. In discussions with managers in various companies (as well as a group of executive MBA students in Singapore), I get almost unanimous agreement that their companies are not ready for such total transparency.  In situations where companies have not achieved a true meritocracy (which is probably the case in a majority of organizations), revealing every employee’s salary will only breed resentment and perceptions of unfairness.

The second practice is around “firing all managers.” According to Burkus:

“Some of the most successful companies have opted to fire all their managers. Others have found ways to push some of the management function down to the level of those who are being managed. Research suggests that employees are most productive and engaged when they, and not their manager, control their destiny.” (p. 176)

Many years ago, the common management wisdom was that a manager’s span of control should be no greater than five. Larger than that and a manager would not be able to devote the time to “manage” his or her direct reports effectively. These days, some CEOs have direct reports of over 20. At Google, Schmidt and Rosenberg (2014) report on their rule of seven—managers should have a minimum of seven direct reports. One reason for pushing the span of control outward is to prevent managers from doing too much micromanaging, thus providing more autonomy for employees (which is Burkus’ point). Organizations like Zappos, Dupont and Whole Foods have experimented with so-called “self-managing teams” but to suggest that this will work universally can be a dangerous prescription. In some cases, less experienced workers may need strong coaching from their supervisor. In fact, Pfeffer (2007) has pointed to organizations like Southwest Airlines that has one of the highest ratios in the industry of supervisors to those being supervised. In other cases, employees’ needs and preferences might clash with this approach. When Zappos implemented its workplace hierarchy, for example, turnover rates jumped approximately 15-20%.

In addition, there are unintended consequences to this trend towards flattening or delayering. In an interesting analysis, Wulf (2012) investigated whether this practice has in fact occurred in corporations. She sampled 300 large US firms over a 15-year period and found that indeed flattening has occurred, at least at the higher levels of organizations. She found, for example, that the number of firms with COO positions decreased by around 20 % over this period, and the number of positions between division head and CEO decreased by about 25 %. She also found that the number of positions reporting directly to the CEO almost doubled (from 4.5 to almost 7), and more recent data suggest that this trend is continuing (with average span of control up to 9.8).

However, she also found that decision-making actually became more centralized, and CEOs of these flattened companies became even more hands-on. Perhaps part of the reason for this is her finding that the composition of the types of positions reporting to the CEO has also changed. That is, the C-suite started to expand to include executives with global functional responsibility in such areas as human resources, information technology, and marketing. If this is in fact a result of flattening, lower-level managers may feel more disempowered, and the tensions between headquarters and subsidiaries increasing. Her finding is not surprising given the trend in global organizations to “globalize” and integrate certain core functions such as human resources and supply chain. This has led to multiple tensions between the corporate center and the subsidiaries and operating units, and occasional confusion as to whether this is part of a pendulum swinging back to centralization from decentralization.

Another unintended consequence of flattening might be an increased workload for employees. As Pfeffer (2007) has pointed out: “Since people have been taken out of the organization, those that remain have more to do unless something has been done to decrease the total workload. And there are fewer people in the organization to ensure coordination, reflection, and learning.” (pp. 34-35)

I am not suggesting that companies should shun these emerging management practices. Some of them might actually stand the test of time and effectiveness. Companies might even want to introduce some of these tools as a vehicle to provide a jolt to the organization or to signal its willingness to think outside the box.

Let’s take a current hot trend towards creating more agile and fast teams. Erik Ries (2017), who was one of the first to codify this approach and apply it to start-ups, has been in much demand with many companies lately, including such large Fortune 500 companies like GE and General Motors (as reported in Fortune, March 2018 issue).  He has tapped into an important need that many companies large and small are facing today. In a 2017 Deloitte survey of more than 10,000 business and HR leaders across 140 countries, 94% report that agility and collaboration are critical to their organizations’ success, but only 6% say they are highly agile today. Implementing this “agile team” approach might very well help an organization that is faced with slow decision-making, silo mindsets and a lack of collaboration.

Nonetheless, I would recommend starting out by answering the six questions above carefully before deciding to introduce a new tool to your team or organization. It is also important to experiment and pilot. And if you are part of a global company and are considering some of these practices, it is also important to make sure that these practices will work globally.

 

Burkus, D. (2016). Under New Management: How Leading Organizations Are Upending Business as Usual. Boston: Houghton Mifflin Harcourt.

Pfeffer, J. (2007). What Were They Thinking? Unconventional Wisdom About Management. Boston: Harvard Business School Press.

Pfeffer, J. and Sutton, R. (2006). Evidence-Based Management. Harvard Business Review, 84 (1), January.

Reis, E. (2017). The Startup Way: How Modern Companies Use Entrepreneurial Management to Transform Culture and Drive Long-Term Growth. New York: Currency.

Wulf, Julie. (2012) The Flattened Firm: Not as Advertised. California Management Review, 55(1): 5–23.

For Corporations, Is It a Small (Global) World After All?

In one of my overseas assignments some time ago, the global company I was working for had just hired Steve to run its IT center in Hong Kong.  Steve was a Singaporean who had worked at IBM for over twenty years, and had deep functional expertise and experience.  What struck me most about him when I met him, however, was his attire:  a pinstriped suit, white button-down shirt, rep tie and wing tip shoes.  Even though he had left IBM the month before, he (and others like him from IBM in those days) could not quite shed the IBM “uniform” he had worn for so long.

Most of us are aware of the various practices that organizations implement to try to instill a common corporate culture.  Many Japanese companies with overseas subsidiaries used to require employees to wear uniforms and participate in morning calisthenics.  Wal-Mart had employees in many overseas locations gather around every morning for the Wal-Mart cheer.

These corporate artifacts and behaviors are at the tip of the iceberg that is above the water.  Corporate culture, like national culture, has visible and invisible aspects.  Edgar Schein refers to three levels of culture:  artifacts, values and basic assumptions.  At the tip of the iceberg are rituals and organizational practices, while underneath the water are those less visible attitudes, values and assumptions.

Most organizations, especially those that have a presence in many countries, are constantly looking to create the “glue” that will bind employees’ hearts and minds together.  And many of them focus on such practices.  Talk to managers in some of these multinational companies, and you will refer to the Ford Way, or the Unilever Way, or the Toyota Way.  Do these work?  Every corporation, like every individual, is to some extent a product of its national culture.  It makes assumptions especially around management practices that are in part based on values and beliefs of the national culture of its founders and executives.

Can a global corporation today create a culture that somehow transcends or trumps national culture?   Yes, but only if it focuses on what’s underneath the iceberg – on those values and traits that cut across cultures.

One of the most intriguing pieces of work in this area is by Professor Dan Denison and his colleagues.  Through their research, they have identified four organizational cultural values, or traits (as they put it), that are strongly related to organizational performance.  These are:

  • Involvement – empowering employees, building teams, and developing human capability at all levels to build a sense of commitment and belief that their work is connected to the goals of the organization.
  • Consistency – having leaders who “walk the talk” by role modeling core values, and a set of processes that are aligned with these values.
  • Adaptability – an organization that listens to its customers, takes risks, learns from its mistakes, and is constantly improving.
  • Mission – having a clear sense of purpose and direction, along with a vision of how the organization will look in the future.

Using data from this organizational cultural model that they have collected from 200 organizations in Europe, North America and Asia, along with other data from 218 organizations from seven countries (including Canada, Australia, Brazil, U.S.A., Japan, Jamaica, and South Africa), Denison et al. found generally high correlations between overall performance and these cultural indices:  “The link between company cultures and effectiveness appears to be both strong and consistent.  In addition, the scores for the culture measures are essentially the same for the samples of organizations in each of these … regions.” (p. 106)

What about practices, those behaviors that are above the water of the iceberg? Shouldn’t there be a relationship between these practices and cultural values?  In an interesting study, Fischer et al. surveyed 1239 employees from various organizations in six countries (Argentina, Brazil, Malaysia, New Zealand, Turkey and the United States) to analyze the impact of cultural dimensions on perceptions of organizational practices.  They focused on 71 practices, factor analyzed the data, and identified three factors:  employee orientation, formalization, and innovation.  Sample items for employee orientation included:

  • Managers give employees freedom to express their ideas
  • Employees have a say in matters that directly involve them
  • Managers encourage employees to speak up when they disagree with a decision.
  • Sample items from the formalization factor include:
  • Everything in the organization is done according to a previously defined procedure
  • What employees have to do is strongly determined by formal procedures
  • Control and centralization are important.

Finally, sample items for innovation include:

  • People are always searching for new ways of approaching problems
  • There is a lot of investment in new products in this organization
  • This organization frequently searches for new markets for existing products.

What they found were significant effects of cultural differences (e.g., individualism) on the degree of implementation of these organizational practices.  In general, cultural effects for their sample were significantly and consistently larger than any industry effects.

There are two take-aways from these studies that I’d like to emphasize.  Number one, organizational cultural values at the abstract or “principle” level can generalize across cultures – which is good news for global organizations that are looking for this glue.  Specifically, taking Denison’s model into account, organizations that are attempting to create a culture of empowerment, consistency of word and deed among their leaders and with their processes, continuous improvement and risk-taking, and clarity of vision will find that these principles can resonate with their employees in different countries.  Not only that, but perhaps even more importantly, having these values in place seems to help companies gain competitive advantage.

Number two, organizations should be careful not to assume that these cultural values will translate into the same behaviors and practices in different countries. To build a universal corporate culture, organizations need to focus on corporate values such as the ones identified by Denison rather than specific practices that may be need to be adapted from culture to culture.  For example, “involvement” for companies based in North America might mean giving employees more freedom to make decisions.  For companies based in Asia, it might mean giving employees information about the company’s plans which will make them feel more included and part of the company – an important consideration especially in collectivist cultures.  “Adaptability” for companies based in North America might mean allowing individual employees to make mistakes and encouraging them to take risks.  For companies based in Asia, this might mean asking groups to find ways to continuously improve their processes.

Denison and his colleagues put it this way:  “ … a concept like empowerment is important around the world, but we would not argue that this means the same behaviors would necessarily constitute empowerment in a different national context … (this cultural) model probably says much more about the presence of a desirable set of traits than it does about how those traits are expressed.”

 

Denison, D., Haaland, S., & Goelzer, P.  (2004).  Is Asia different from the rest of the world?  Organizational Dynamics, 33 (1), pp. 98-109.

Fischer, R., Ferreira, M., Assmar, E., Baris, G., Berberoglu, G., Dalyan, F., Wong, C., Hassan, A., Hanke, K., & Boer, D.  (2014).  Organizational practices across cultures:  An exploration in six cultural contexts.  International Journal of Cross Cultural Management14 (1), 105-125.

Schein, E.  (2010).  Organizational culture and leadership (fourth edition).  San Francisco:  Jossey-Bass.

Headquarters Versus Local Overseas Offices – Worlds Apart?

Here are some comments I have heard over the years from executives sitting in regional or headquarters locations about local managers in their subsidiaries:

  • They don’t seem to want anything to do with Corporate.
  • Why can’t they trust us?
  • Don’t they see that they have to follow corporate rules and that they are part of a bigger company?
  • Why do they think their problems are so unique?

At the same time, here are some comments I have heard from these local managers:

  • Doesn’t Corporate understand that you just can’t have a cookie-cutter, one-size-fits-all approach?
  • We understand the local markets much better than they do!
  • These corporate initiatives will not always work in every market.
  • Corporate always wants to have control; they don’t want us to be independent and think for ourselves.

And then there is that recent study of over 1000 Asia-based executives in various industries, organizations, and functions by the Corporate Executive Board and Russell Reynolds (as reported in the April 2015 issue of Harvard Business Review). The following are three of several statements with which these executives were asked to agree or disagree:

  • Headquarters understands the realities of doing business in Asia.
  • Headquarters makes decisions aligned with the regional context.
  • Headquarters consults local leaders before setting regional strategy.

In all three statements, the percentages of executives agreeing to this statement were in the low teens to twenties, regardless of whether these Asia-based leaders were in the local organization or whether they were in headquarters. The specific percentages were 12, 14, and 14 respectively for the local Asia-based leaders and 20, 21, and 28 for the Asia-based leaders in headquarters.

These different points of view between HQs and local executives suggest not only some gaps in understanding each other, but potential missed opportunities. For example, subsidiaries might not be taking advantage of resources and expertise from HQs or from other markets that might help them improve their subsidiary performance as well as fight competition in their markets. HQs might be missing opportunities to learn about local practices that might be fruitful to implement in other markets.

In my experience, the tension between headquarters and local offices seems to be getting bigger, especially as global companies continue to “globalize” some of their functions, such as Supply Chain, Finance, Marketing and HR. Furthermore, when subsidiaries do take initiative, as Birkinshaw et al. (1998) point out: “… initiative is often seen by parent managers as subversive, that is, evidence of subsidiary managers acting in their own or their country’s interests rather than in the interests of the MNC as a whole.” (p. 235)

I was recently in Singapore to teach a class, and my students (most of whom were executives of large global companies heading their subsidiary or region) echoed most of what I heav been hearing over the years about the perceived lack of understanding or flexibility from Headquarters.

We all know that it is in the nature of organizations to create divisions of labor and specialization for the purpose of clarifying roles and responsibilities and improving efficiencies. These days, organizations require functional experts and sophisticated organizational designs to adapt to complexities in the business environment. The unintended consequence of such differentiation, however, is the creation of separate identities and us-versus-them mindsets across the organization. We see Marketing and Sales at loggerheads at times, or Finance and HR, or R&D and Supply Chain. Some corporations have had pendulum swings from centralization to decentralization and vice versa. In one corporation that had traditionally allowed full autonomy in its subsidiaries as long as they delivered the results, the CEO was surprised to learn that country general managers had even gone so far as to change the look and feel of the company logo. This might have been a trivial matter for some, but the corporation was trying to establish a global brand image, and the inconsistency with which its brand name was being positioned in different countries did not help.

In his book about his transformation of IBM and its survival (Gerstner, 2002), former IBM CEO Lou Gerstner writes:

“One of the most surprising (and depressing) things I have learned about large organizations is the extent to which individual parts of an enterprise behave in an unsupportive and competitive way toward other parts of the organization. It is not isolated or aberrant behavior. It exists everywhere – in companies, universities, and certainly in governments. Individuals and departments (agencies, faculties, whatever they are called) jealously protect their prerogatives, their autonomy, and their turf.” (p. 249)

These structures and processes represent one set of factors that influences the nature of the relationship between headquarters and their subsidiaries and may account for the lack of mutual understanding of local and of corporate needs respectively. Geographical as well as cultural distance only exacerbates this. As functions have become globalized, defining what can be decided globally versus locally needs to be debated and clarified. For example, some years ago, one corporation decided to implement its business-casual dress policy worldwide. In its Tokyo headquarters, managers there simply ignored the corporate edict; in Tokyo’s business environment at that time, men and women tended to dress more formally and local managers considered it unthinkable to “dress down.”

More recently, rather than considering whether to “globalize” or not in general, many firms are making these determinations both as a whole (e.g., creating a global brand, establishing a global culture) as well as with specific value chain activities (e.g., establishing global relationships with a few advertising agencies, rather than having each subsidiary decide which advertising agency it wants to use). Rugman et al. (2011) have defined four such distinct value chain activity sets: innovation, production, sales and administrative.

Another set of factors has to do with the nature of the local environment as well as the nature of industry forces (Enright and Subramanian, 2007). This will influence whether the company adopts a one-size-fits-all approach or customized solutions by the local subsidiary. Companies in certain industries like technology (e.g., Microsoft) tend to define the corporate-subsidiary relationships differently than companies in other industries. A third set of factors lies with organizational capabilities in two specific competencies: global mindset, and skills in influencing without authority to produce win-win solutions.  In my experience, few organizations have made a determined effort to build these capabilities in their managerial work force, or to hire and promote individuals who demonstrate these skill sets. Furthermore, organizations, when assigning managers to global roles, don’t always consider these capabilities as selection criteria.

Some organizations have created mechanisms and built bridges to narrow this differentiation and encourage integration. For example, many large corporations have modified their reward systems to reinforce collaboration and cooperation across divisions; others have focused on developing a corporate culture which helps employees to identify with the firm (e.g., “I’m an IBMer”; “I’m a Merckie”). However, it can seem like an uphill battle at times.

In fact, many organizations, especially those that have a presence in many countries, are constantly looking to create the “glue” that will bind employees’ hearts and minds together and will transcend country or national culture differences. Establishing such a global corporate culture can be difficult especially for relatively young corporations (those so-called born-global companies such as Uber) or for corporations expanding its overseas presence (such as Hyundai and Haier). Those that have been successful have established strong cultures that transcend boundaries; talk to managers in some of these multinational companies, and you will hear them refer to the Ford Way, or the Unilever Way, or the Toyota Way.

While there has been much written about the role of headquarters in reaching out to the subsidiaries, there has not been as much advice to subsidiaries, and what local managers can do. Birkinshaw et al.’s article (2007) is one of the few that have examined what subsidiaries could do to get headquarters to pay more attention to them. They make the argument that “A subsidiary’s degree of decision-making autonomy has no meaningful effect on the level of executive attention it receives.” In their research, they asked subsidiaries how they were getting HQs to pay more attention to them. For example, they asked, “How does a subsidiary which lacks weight attract the attention of management?” They concluded that subsidiaries can make two kinds of efforts: initiative taking (e.g., developing new products, penetrating new markets) and profile building (e.g., supporting corporate objectives, creating a center of expertise. Unfortunately, subsidiaries that are not considered strategically important may not get the level of attention, and therefore the resources, they need. The lost opportunities that might result include competition taking market share away from the subsidiary, business ventures that if nurtured might grow the subsidiary significantly, or attracting local talent to help build the human capital in the subsidiary.

Here are five recommendations for those of you in subsidiaries who may be somewhat frustrated with the lack of understanding that your regional or headquarters bosses have. First, understand where your bosses are coming from, their pressure points, and what’s driving them. As Marshall Goldsmith has often reiterated when explaining upward influence, consider your boss as a customer. Second, share information willingly and proactively, not just with your bosses but also with your peers in other countries. In one corporation, a country manager from a South American subsidiary suggested a business solution he had found useful to his colleague from the corporation’s African subsidiary. A year later, the African subsidiary had successfully implemented this solution and the South American manager got recognition for his contributions by being promoted to a regional role.

Third, find common ground on issues. Rather than repeating the refrain that your country is unique and that corporate practices will not work in your country, find those corporate practices that will work and highlight those. Find local actions you can take that build on the subsidiary’s capabilities and that can be applied in other markets.  Fourth, remind yourself that you are a corporate citizen, a member of your global company, and not just an employee at a subsidiary. Remember that in your country, many see you as the representative of your global company. Make an effort to understand the strategic objectives of the company, and make sure you demonstrate that what you are doing aligns with these objectives. As Birkinshaw et al. (1998) point out, “For initiatives to be accepted by the corporate headquarters, they must be aligned with the MNC’s existing strategic priorities, otherwise they are likely to be viewed as self-interested behavior.” (p. 236)

And fifth, proactively initiate actions to get headquarters to understand the country perspective. Here are some examples: provide information to regional or corporate management on local consumer or competitive information; invite corporate executives to visit your subsidiary; send some local talent to headquarters to learn, network and to do some indirect PR about your subsidiary; offer to host a regional meeting in your subsidiary.

 

Birkinshaw, J. et al. (1998). Building Firm-Specific Advantages in Multinational Corporations: The Role of Subsidiary Initiative. Strategic Management Journal, 19, 221-241.

Birkinshaw, J. et al. (2007). Managing Executive Attention in the Global Company. MIT Sloan Management Review, 48 (4), pp. 39-45.

CEB and Russell Reynolds Associates (2015). Hello? Anyone in HQ Listening? Harvard Business Review, April.

Enright, M. and Subramanian, V. (2007). An Organizing Framework for MNC Subsidiary Typologies. Management International Review, 47 (6), pp. 895-924.

Gerstner, L. (2002). Who Says Elephants Can’t Dance? New York: HarperBusiness.

Rugman, A. et al. (2011). Re-conceptualizing Bartlett and Ghoshal’s Classification of National Subsidiary Roles in the Multinational Enterprise. Journal of Management Studies, 48 (2), pp. 253-277.

How Am I Doing? 360-Degree Feedback in Asia

I recently returned from Singapore, where I taught an executive MBA class in Global Leadership to a group of mostly Asian managers and executives. As part of the course, they were required to participate in a 360-degree feedback process using a a popular instrument, the Leadership Practices Inventory (Kousez and Posner, 2012). For many of them, although they were working for global, multinational companies, it was the first time they had experienced this kind of feedback from others – their managers, their co-workers, and others.

Now I know that it is simplistic to make generalizations about Asian cultural values, and even more so with this class (with students representing at least six different nationalities, including a few American expatriates). My class was certainly not representative of Asians in general, nor even of Asian managers in general. As scholars such as House et al. (2004) have shown, there are at least two distinct cultural clusters in Asia: Confucian Asia (e.g. China, Singapore, South Korea) and Southern Asia (e.g., India, Malaysia, Thailand). Hofstede (2001) and others have pointed out that Asian cultures tend to have higher Power Distance and Collectivism scores than Western cultures. More specifically, Power Distance tends to be higher in Southern Asia than in Confucian Asia, while Collectivism is higher in Confucian Asia than in Southern Asia. Southern Asia managers more so than Western managers tend to value leaders who are somewhat more authoritarian and more decisive in their decision-making; Confucian Asia employees value work places where harmony, relationships, and group recognition rather than individual achievements and confrontation are emphasized. In addition, as Ready et al. (2008) point out in their HBR article on attracting talent in emerging markets, employees from these markets (which include Asian countries such as China and India) value work place cultures that emphasize meritocracy, opportunities to learn and develop, and a strong connection to their teams and to their company. I kept these contextual factors in mind as I coached my students around their feedback and their reactions. Having spent time with these students, both as a group and individually through one-on-one coaching sessions with their 360-degree feedback results, the following are three impressions I have about their reactions to feedback, and how these tie to the use of 360-degree feedback in Asian cultures.

First, these managers and executives were eager not only to understand and learn about their feedback, but to also figure out what they could to do to develop themselves. When I met with each of them, they had already pored over their results and were especially interested in the written comments, some of which they claimed never to have heard before from others in such overt fashion. This is perhaps consistent with the generally non-confrontational and high-context language in many of these Asian cultures, especially among peers. About half had asked people outside their work place to give them feedback, including childhood friends, elderly relatives, parents’ friends, and their spouses. Many had actually already shared their results with their spouses.

Second, perhaps because educated Asians were focused on grades as they were going through school, many of my students were particularly interested in the numerical scores and the percentile ratings. They wanted to know how “good” they were, and tended to view the results as a sort of report card. While coaching them, I suggested reframing their view of these results not as a grade, but as developmental feedback. As I explained to them, the ratings are based not on how well or how poorly they were demonstrating certain leadership behaviors, but on how frequently their raters observed them performing these behaviors. It is certainly possible that in the context in which they interacted with some of their raters, these raters did not have an opportunity to view some of their leadership behaviors. For example, a family friend who provided ratings may not necessarily have observed the manager “challenging the process” (one of the leadership categories in the Leadership Practices Inventory).

Third, consistent with the higher Power Distance among these cultures, many students focused on the discrepancies between their ratings and their managers’ ratings. What was interesting was that of the 30 specific leadership practices, not one showed a statistically significant difference between self-ratings and managers’ ratings as well as for all observers’ ratings for the class as a group. Eckert et al. (2009) had reported in their comparisons of rating discrepancies from 31 countries that cultural values affected these discrepancies. For example, they found that self-ratings and observer ratings were more discrepant (with the former significantly higher than the latter) in high Power Distance cultures versus low Power Distance cultures.

In this small sample, I did not find this to be the case. Among my class, I also did not find differences in self-manager discrepancies among those from Confucian Asia and those from Southern Asia. There are several possible explanations for this. First, many of these students work in large companies with established performance management practices. While 360-degree feedback may not be universally practiced in these companies, regular performance reviews with one’s manager certainly are. Second, as some students explained to me, they tended to be “hard” on themselves and were downplaying their own self-ratings (similar to some research around gender issues that suggests that females tend to provide lower self-ratings then males). This was interesting, since another study (Gentry et al., 2010) found a “leniency bias” among its sample of Asian managers, and others have found such a bias in general when comparing self-ratings and observers’ ratings (e.g., Church, 1997); that is, self-ratings were more favorable than ratings by other sources. Third, as Gentry et al. (2010) have suggested, it might be that those with greater agreement on their ratings with their managers are in fact better performers. My class (most of whom were taking their executive MBA class with the approval of, and in some cases, the financial support of their companies) was most certainly reflective of this population of high performers. Fourth, especially for those in countries where Collectivism is a strong cultural value, supervisors, co-workers and others might have a tendency to inflate their ratings a bit in the spirit of preserving harmony. This might be the case especially for those who may believe that their ratings might not be anonymous.

Overall, I found receptivity to 360-degree feedback to be very positive. The students did not seem to go through the “SARA” feedback stages – from Shock to Anger to Resistance/Rejection and finally to Acceptance (Zenger and Folkman, 2010) – and were eager to move on and identify steps they could take to improve their leadership. Based on this small sample, there do not seem to be serious concerns about implementing 360-degree feedback in these cultures. In fact, use of 360-degree feedback is fairly common in many multinationals today, both Western and non-Western. In a study of over 650 organizations in the Asia Pacific region, for example (Mercer, 2013), 45% of organizations report that they do use 360-degree feedback; and 42% of them report that they provide individuals new in a global role with 360-degree feedback within the first year of their new assignment.

Unlike even say, twenty years ago, many Asian managers today are being constantly exposed to Western management practices, whether through their organizations, their formal education in school, or through the internet. This does not mean that cultural and contextual factors should be ignored, and that cultural preferences no longer exist. Some of these cultures are over two thousand years old, and their beliefs and assumptions are very deep-seated. It would be naïve to suggest that these values can change in a generation or two. Yet changes at least in work place practices are indeed coming, and perhaps accelerating. In the U.S. culture, for example, individualism has continued to be a very strong cultural value, yet we see collaboration and team work practices being emphasized and, in many cases, embraced in the work place. Companies such as Goldman Sachs and Accenture have implemented programs in their Japanese offices to help local employees interact more effectively with their Western colleagues and clients. With continued globalization, we will most likely see a greater evolution and transformation of work place practices around the world.

 

Church, A. (1997). Managerial Self-Awareness in High-Performing Individuals in Organizations. Journal of Applied Psychology, 82: 281-292.

Eckert, R. et al. (2010). “I Don’t See Me Like You See Me, But Is That a Problem?” Cultural Influences on Rating Discrepancy in 360-degree Feedback Instruments. European Journal of Work and Organizational Psychology, 19 (3): 259-278.

Gentry, W. et al. (2010). Self-Observer Rating Discrepancies of Managers in Asia: A Study of Derailment Characteristics and Behaviors in Southern and Confucian Asia. International Journal of Selection and Assessment, 18(1): 237-250.

Hofstede, G. (2001). Culture’s Consequences (2nd Edition). Beverly Hills, CA: Sage.

House, R. et al. (2004). Culture, Leadership and Organizations: the GLOBE Study of 62 Societies. Thousand Oaks, CA: Sage Publications.

Kousez, J. and Posner, B. (2012). The Leadership Challenge (5th Edition). San Francisco, CA: Jossey-Bass.

Mercer Consulting Group. (2013). http://www.mercer.com/content/dam/mercer/attachments/global/Talent/Develop-APLdrshpDevPractStudyRpt.pdf

Ready, D. et al. (2008). Winning the Race for Talent in Emerging Markets. Harvard Business Review, 86, November.

Zenger and Folkman (2010). http://zengerfolkman.com/meet-sara-our-emotional-response-to-bad-news/

East Is East … But Is the Twain Meeting?

Are differences across cultures diminishing? With globalization and the dominance of U.S. culture over the past few decades, several of my students and as well as managers I have discussed this with believe that they seem to be.

For example, Alex is a Singaporean human resources manager working for a French company based in Singapore and who has a regional role. He has a network of colleagues from his company all around the world, as well as other HR professionals from other countries and other industries. He speaks English fluently and in fact went to university in the U.S. and completed his MBA at London Business School. He enjoys listening to jazz, loves Indian food, and likes to shop at Brooks Brothers and Uniqlo for his apparel needs. Is Alex (and many others like him around the world) Exhibit A that our tastes and preferences are becoming more convergent? On the other hand, what about those who choose to become part of a self-selected culture that is often at odds with this global culture? Arnett (2002) cites religious groups such as Orthodox Jews and fundamentalists, as well as certain non-religious groups. Will these groups continue to exist outside the mainstream for the most part, or will they eventually be assimilated into this global workplace culture?

Over the past few decades, since Hofstede began his pioneering research on cultural differences in the workplace and the launch of the massive GLOBE study as well as the World Values Survey examining differences in cultural values, thousands of research papers and articles have been written on the validity and usefulness of comparing national differences in workplace cultural orientations or values. Terms such as “power distance” and “uncertainty avoidance” have become commonplace in the management field. However, as I pointed out in my recent book Successful Global Leadership (Henson, 2016), generalizations about workplace cultural values should be taken with caution for the following reasons.

First, each of these orientations is on a continuum and, while cultures can be arrayed along this continuum, it is important to consider the relative standing of cultures on each orientation rather than their absolute position. For example, while many would consider the U.S. as a more “direct” or confrontational culture relative to say, China, it is relatively less direct than other countries like Germany.

Second, these orientations are averages or central tendencies. It does not mean that everyone in that culture behaves in accordance with these orientations. Individuals within a culture will tend to fall along a distribution, although the shape of the distribution (e.g., tall or flat) may vary depending on the specific cultural orientation. For example, you may meet a Chinese executive in Beijing who you expect to behave in a certain way based on your understanding of Chinese cultural values. However, when you find out that this Chinese executive went to college in America, worked for a Swiss company in Lucerne, and got his MBA at Insead, this individual will be an outlier compared to the average Chinese.

Third, because cultures can evolve over time, these orientations should be considered as a starting point in analyzing countries’ workplace cultural orientations. Technology and globalization have created a “flatter” world, and managers everywhere are increasingly exposed to management practices from all over the world. It is understandable that these external factors will have an influence on employees’ beliefs and values around these orientations.  For example, Migliore (2011) found relatively low power distance scores in her study of young Indian managers, which she attributes in part to the greater exposure of Indian mangers to technology and their interactions with global companies.

Fourth, some of these orientations are multidimensional, so it is possible to have a culture that may be on both extremes of an orientation, depending on its specific sub-dimensions.  Gannon (2007) makes this point well in his discussion of paradoxes around monochronic versus polychronic time, and with low and high context. Because the original formulation of time and context offered several interpretations of this dimension, it is possible that two extremes can co-exist. Gannon gives the example of the karaoke bar which allows for the expression of low-context behavior and in fact serves as an emotional outlet for people in high-context cultures. Gannon states: “While it is possible to describe the dominant profile of a culture as either low context or high context, we must realize that cultures can be both low context and high context but in different situations and contexts.” (p. 87)

Triandis (1995) has also suggested that polar opposites in each of these orientations can co-exist. For example, he states: “All of us carry both individualist and collectivist tendencies; the difference is that in some cultures the probability that individualist selves, attitudes, norms, values and behaviors will be sampled or used is higher than in others.” (p. 42). There may indeed be situations when individuals behave contrary to the general expectations of the culture.

Let’s go back to Alex. Despite all the outward signs, he is also deeply rooted in Singapore, with a Singaporean wife and two children, plus parents and in-laws and other relatives. He is very proud of his nation-state, and like many Singaporeans has a deep respect for Lee Kwan Yew. He and his family follow Buddhist principles, although he is not deeply religious. As Edgar Schein and others have pointed out, culture has several layers. The superficial, if you will, is above the iceberg, and includes artifacts and visible aspects. The more deeply held beliefs and values are below the iceberg and require more time (and reflection) to recognize and understand them.

Nisbett (2010) provides an excellent discussion of some of the fundamental differences between East Asians and Westerners in his book The Geography of Thought. Two specific examples he gives are particularly striking. First, he cites a primer that Americans of a certain age will remember. In this early childhood book, Dick and Jane along with their dog Spot are the main characters. In one of these books, a pre-primer, there are pictures of Dick and Jane with the captions, “See Dick. See Dick run” and “See Jane. See Jane run. Run, Jane, run.” Nisbett compared this primer with the first page of a Chinese primer in the same time period showing a picture of a little boy on the shoulders of a bigger boy. The caption, according to Nisbett, reads “Big brother takes care of little brother. Big brother loves little brother. Little brother loves big brother.” Note the emphasis on relationships versus individual action, as Nisbett observes.

The second example is even more directly relevant to the work place. A typical statement or probe from a person who might be interviewing someone for a position for which he/she is applying for is the following: “Tell me about yourself.” According to Nisbett, Americans tend to respond to this question by focusing on their personality traits, role categories, and activities. I might also add that in an interview setting, Americans might talk about their job history and some of their individual accomplishments. Chinese, Japanese and Koreans, on the other hand, describe themselves invariably in terms of context. In one study that he cites, “Japanese found it very difficult to describe themselves without specifying a particular kind of situation – at work at home, with friends, etc. Americans, in contrast, tended to be stumped when the investigator specified a context, reflecting a belief that ‘I am what I am.’” (p. 53) Such cultural differences are deeply rooted, and in the case of Asians in particular, go back many centuries.

In summary, here are two points to remember. First, cultural preferences as well as workplace cultures do seem to be converging in terms of some of their superficial aspects (e.g., dress, musical tastes, food). However, values and beliefs that in many cases have been shaped over thousands of years, and are still being reinforced through parenting and educational practices, continue to define overall cultures as well as workplace cultures. Second, we carry multiple identities, and which identity we decide to take on may depend on the situation. We may be a global manager at work and in our interactions with headquarters bosses, yet remain rooted in our own national culture when managing and influencing local workers.

Arnett (2002) suggests that many young people today develop a global identity in addition to retaining their local identity. Their global identity gives them a sense of belonging to a worldwide culture, while they continue to retain their local identity. Take the collectivistic belief around the importance of family, and specifically beliefs around obligations towards one’s parents. In many individualistic societies, children are not expected to take care of their parents as they age; placing the elderly in assisted living and nursing home facilities is fairly common in these countries. Yet in describing this practice even to well-educated and well-traveled managers in collectivistic cultures, some express disbelief that adult children would even consider placing their parents in nursing homes as opposed to having their parents come and live with them in their homes. The sense of obligation and family ties are very strong despite their exposure to the outside world and global trends.

For managers and organizations, my advice would be the following. First, while recognizing that on the surface, your employees and teams in different countries may behave similarly (e.g., they will all speak English rather fluently, wear the latest fashions, like Western cuisine and rock music), continue to recognize and respect cultural differences especially in terms of their values and beliefs. Be careful in making assumptions about underlying beliefs and values based on what you see on the surface. “We all work for the same company and speak English, so underneath we are all alike” is one such common but mistaken assumption. For example, recognizing that power distance is valued in some cultures may mean that you will have to adjust your management style to become a bit more authoritarian at times. Several practices to empower employees (such as Zappos’ holocracy approach) would not work that well in such cultures.

Second, continue to find ways to integrate these differences (rather than ignoring or suppressing them) to build a high-performance team. Youseff and Luthans (2012) refer to “ambicultural” managers – those who are looking for the best of both cultural worlds, rather than viewing the differences as a gap that should be minimized or eliminated. A good way to do this, especially in cultures where team members may be hesitant initially to express their ideas, is to make sure your statements reinforce your willingness and desire to listen to their ideas. For example, you might say “I am interested in what you think about this idea” or “If you have any concerns, I would be interested in learning about them.” You might ask your team members what might happen if a certain management practice were implemented in their subsidiary, or what some of the barriers might be in implementing such a practice, and what could be done to address these barriers.

This approach actually works well in many cultural contexts, including the U.S. O’Toole and Bennis (2009) point to a study on NASA’s findings about the human factors involved in airline accidents. The study placed existing cockpit crews—pilot, copilot, navigator—in flight simulators and tested them to see how they would respond during the crucial 30 to 45 seconds between the first sign of a potential accident and the moment it would occur. The “flyboy” pilots, who acted immediately on their gut instincts, made the wrong decisions far more often than other pilots who said to their crews, in effect, “We’ve got a problem. How do you read it?” before choosing a course of action. The pilots who’d made the right choices routinely had open exchanges with their crew members.

 

Arnett, J. (2002). The Psychology of Globalization. American Psychologist, 57 (10): 774-783.

Gannon, M. (2007). Paradoxes of Culture and Globalization. Thousand Oaks, CA: Sage Publications.

Henson, R. (2016). Successful Global Leadership: Frameworks for Cross-Cultural Managers and Organizations. New York: Palgrave Macmillan.

Migliore, L. (2011). Relation Between Big Five Personality Traits and Hofstede’s Cultural Dimensions: Samples from the USA and India. Cross-Cultural Management: An International Journal, 18(1): 38-54.

Nisbett, R. (2010). The Geography of Thought: How Asians and Westerners Think Differently …  and Why. New York: Simon and Schuster.

O’Toole, J. and Bennis, W. (2009). A Culture of Candor. Harvard Business Review.

Triandis, H. (1995). Individualism and Collectivism. Boulder, CO: Westview Press.

Youseff, M. and Luthans, F. (2012). Positive Global Leadership. Journal of World Business, 47 (4): 539-547.

Global, Local, or Glocal

As we all know, corporations are not immune to occasional accounts of hype and exaggeration.  You are no doubt familiar with the inflated claims that some firms make about their products and services.  The FDA and other government agencies sometimes have to step in and dismiss firms’ claims about the supposed efficacy of their products.  Just recently, for example, the FDA has warned a genetic testing company, 23andMe (co-founded by the spouse of Google’s Sergey Brin), to stop sales of its genetic tests because the tests have not been clinically or analytically validated.

I have noticed that corporations in general make two additional questionable and sometimes exaggerated claims about their firms.  The first is that people are their most important assets, and the second is that they always operate ethically.  My point is not that these claims are always false, but that we should not be naive enough to accept these statements at face value.  What we have to do is look for the evidence, to ask ourselves what proof corporations have for making these statements.  At times, the rhetoric fails to catch up with reality.  Johnson & Johnson, as one example, is a firm that takes pride in its credo, a series of statements about its values.  I know many students and business colleagues who work for J&J, and who take these values very seriously.  Yet recently, J&J has been involved in a series of scandals that makes one question the extent to which these values are truly institutionalized. Professor Jeffrey Pfeffer raises similar concerns in his book “Hard Facts, Hard Truths and Total Nonsense:  Profiting from Evidence-Based Management.”

The latest exaggerated claim that I have observed is with companies that say they are truly global.  After all, it is somewhat “in” to claim that you are a global company.  If in fact more than 50% of your sales are coming from outside of your home market, or if your strategy entails your opening up businesses in different markets around the world, it might make sense for companies to brand themselves as global.  Occasionally, these companies say that they “think global but act local.”

Several years ago, Professors Bartlett and Ghoshal coined the term “transnational” to refer to a type of management strategy that tries to resolve and integrate the tensions that arise in global companies between responding to local pressures to customize (“localization”) and global pressures to standardize (“integration”). This is otherwise referred to as a “glocalization” strategy.

Let’s spell out a little more clearly what this means.  To be global, or transnational, is not just about having products and services sold outside of your home country.  Companies that simply export their products are not truly global.  Companies that have subsidiaries overseas in several countries, or where their overseas sales are approaching close to half their revenues, are not necessarily global companies.

In my experience and observations of these companies, I propose a set of questions whose answers would indicate whether or not a company is truly global or transnational.

  1. How culturally diverse are the executives in the C-suite?  Do they only come from the company’s home country, or are other countries represented?
  2. Do subsidiaries in the most important overseas markets have direct reporting relationships to the CEO or COO or do they tend to be buried in layers of reporting structures?
  3. Do executives in key subsidiaries have meaningful global roles (e.g., chairing a global task force) or is their role restricted to delivering profits for their country of responsibility?
  4. How frequently do headquarters executives meet with their subsidiary executives as a team?  Do they fly out to the regions for meetings or do they expect their subsidiary heads to come to home office all the time?
  5. How involved are subsidiary executives with key corporate initiatives?  Do they sit on important corporate councils?  And do headquarters executives seek their input on corporate initiatives before they are rolled out to their regions?
  6. Does the company have a global talent strategy which includes, among other things, the identification of high potentials globally and targeted development plans for these high potentials, no matter what their nationality or country of origin is?  Does its talent strategy also include rotation of individuals from country to country, and not just from headquarters to subsidiaries?
  7. When cross-functional teams are formed to tackle specific initiatives, to what extent are various subsidiaries represented?
  8. Does the company have global leadership programs that are offered worldwide, and to what extent does the curriculum include content on globalization, cross-cultural sensitivity and related subjects?
  9. Are there mechanisms and processes for sharing information and leveraging expertise across borders?  For example, if the company has centers of excellence, does it make sure that these centers have worldwide responsibility for sharing information?
  10. Is global mindset a competency that the company is actively developing, both for its employees and for the firm as a whole?

If a company can respond affirmatively to at least a majority of these questions, then it is well on its way to becoming a truly global or transnational company.  A company that can only answer three or fewer has a long way to go.

Bartlett, C. and Ghoshal, S. (1988).  Organizing for Global Effectiveness:  The Transnational Solution.  California Management Review.

Managing Talent in Global Organizations

As a young professional in an emerging market, would you rather work for a global multi-national or for a local company?  As recently as five years ago, this question was a “no-brainer” for many bright talented men and women in emerging markets like China, Thailand, Vietnam, and Chile.  Working for a global company, especially one with a “brand” name and a strong reputation was especially attractive.  In many cases, the pay was better but beyond that, the opportunities for developing professionally, as well as advancing (maybe even being sent abroad for an assignment), were far better than they were for local companies.

Recently, executives from several global companies whom I have interviewed paint a far different picture of the competition for talent today, especially in these emerging markets.  First, many global multi-nationals’ growth plans have stalled, or at least have slowed down.  Second, in some cases, these multi-nationals have had to downsize and lay off local staff; in a few cases, companies have exited their markets entirely.  Third, local companies, by contrast, have been growing and in some cases, have begun to grow and expand outside of their home country.  Fourth, as local companies have begun to build a strong managerial base and a more professional development process, the gap in development between global and local companies has narrowed.   And fifth, the gap in compensation packages between global and local companies has also narrowed.

There are of course tremendous advantages that some global multi-nationals have.  Many of these companies have been around for over fifty years, and they have a stable and deep history, which is still very appealing today to many young people in overseas markets.  Furthermore, management practices such as managing by objectives, performance reviews, and coaching are well-established in these companies.  So someone just out of school or coming from a state-owned company or family-owned business to join a multi-national would have significant opportunities to learn about these good management practices.

Nonetheless, the reality is that competing for talent in today’s globalized world, especially for U.S.- and European-based multi-national companies, is as tough as ever, perhaps even tougher.  Here are some examples from my own experiences in working with various multi-nationals and interviewing executives from these firms.

First example.  A multi-national company that was entering the Chinese market was looking for a Managing Director to head their operation.  Originally, the company had discussed the position with an executive recruiting firm to see whether there were suitable candidates from the competition and/or from the region who might be interested.  Fortunately, the company found the right person for the job within the company itself.  He was actually a European who had been with the company for over twenty years and had a good track record.  He had lived in China as a college student, and in fact had married a Chinese and so spoke Mandarin fairly well.  And perhaps as important as these other factors, he and his wife were eager to return to China, and this position was a match made in heaven for them.

Second example.  One of the most difficult leadership challenges is motivating a work force that is about to be laid off – not only the high potentials who would most likely get other jobs anyway, but the majority of the work force.  This was the situation for several manufacturing plants that the company decided were going to be shut down in a year and a half.  The employees knew the company’s rationale and recognized that they would be losing their jobs.  In the meantime, they were expected to continue to be productive, adhere to good manufacturing practices and maintain quality standards.

Several months after the announcement was made (and about a year before all the plants were scheduled to close), company executives were surprised to discover that in one plant, productivity measures were breaking records.  They sent some managers to the plant to find out what was going on.  What they found was a work place where everyone was engaged – due in no small measure to the actions of the plant manager.  Let’s call him Matt Jackson.  A long-time employee of the company who had gone to night school to get his MBA, Matt was a passionate leader who believed strongly in what he called “treating people right.”   When he found out that his plant was closing, he immediately called a town hall meeting and let everyone know that he would not only be updating them regularly, but that he and his management team would do what they could to help everyone find jobs.

He set up daily briefings with his direct reports, who in turn communicated these discussions to the rest of the employees.  He set up career centers with his HR department to help every employee work on his or her resume and provide career counseling to everyone who was interested.  The HR team began to contact local recruiters and employment agencies in an effort to find jobs for the plant employees, many of who preferred to stay in the area.  Rather than feeling anxious or resentful about the closings – or worse, distracted from their work – employees became determined to prove that their plant could be productive during its last year and a half of existence.

Third example.   I knew an executive who worked for a pharmaceutical company that many years ago embarked on a strategy of globalizing their manufacturing operations.  They turned to Robert Marconi (not his real name), an engineer who had worked locally in the U.S. in the company’s various manufacturing plants.  Robert was single, and eager to go overseas.  For the next twenty years, he helped his company build greenfield manufacturing operations in various countries – selecting a team, hiring locals, directing construction and making sure the plant met FDA approvals.  When I met him, Robert was about to meet with the FDA to walk them through the manufacturing plant that was nearing completion in an Asian country.  He was then in his late fifties, certainly not being considered for a senior leadership position in the company.  But he was a highly valued talent for the company.  It would have been nearly impossible for the company to have replaced someone like him immediately.  This is the kind of person that I call a “critical skills” employee for a multi-national.

Fourth example.  In a consumer products organization where I once worked, its German subsidiary was underperforming.  Germany was one of its largest markets but unfortunately suffered from a lack of strong leadership.  Senior management considered hiring a German from outside the firm to lead the subsidiary but, after much discussion, decided to transfer a high-potential South American to become General Manager.  At first blush, this seemed like a poor fit, at least culturally.  However, Enrique Martinez (again, not his real name) had proven himself well in the small Latin American country he had led over the past three years and was ready for bigger challenges.  Furthermore, he had many of the attributes which the company believed the German subsidiary needed – an inspirational leader who was very results-driven, with strong people skills and an execution mind set.  Martinez moved with his family to Germany and within six months, had accomplished an incredible turnaround.

One of the lessons that these examples demonstrate is that companies need to think about their talent multi-dimensionally.  While there should be an overall corporate talent strategy (much like an overall corporate business strategy), companies should also consider talent strategies for at least four segments of its employee population (as reflected in the examples above):

  1. How do we build successors and create a pipeline for the senior levels of the company?
  2. How do we retain the solid performers and the B-players?
  3. How do we recruit and develop talent at the junior levels?
  4. How do we motivate the critical skills employees in our company?

There is no single answer to each of these questions, partly because the answers depend on the particular industry of the company and its competitive position within that industry, the strategic direction of the organization, and its talent philosophy.  Regardless of the particular approach and talent strategy, however, it is important for companies to keep in mind the outcome:  to have an organization with the best talent to help the company achieve sustainable competitive advantage.  This means having people with the right sets of skills and the right mindsets in all the geographies where the organization does business.