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Developing the global Mindset Ultimately,
it is people who formulate and implement global strategies. For a global
corporation, it is important to develop a global outlook among its
employees. Traditionally, two common approaches have been used. In the
first, expatriates are sent from the head quarters to man key positions
in subsidiaries. A second approach has relied heavily on recruiting
people locally for filling the management positions of the subsidiaries.
Ideally, each country’s business needs to be managed by a group of
people with varied national backgrounds. Transnational
companies need to put in place a mechanism by which people can be moved
between headquarters and subsidiaries and across subsidiaries.
Cross-country experience can play a vital role in shaping a manager’s
global outlook. One company which has attached a lot of importance to
international exposure is Nestle. Few top management positions in this
company are occupied by people without substantial experience outside
their home country. Nestlé's current CEO, Peter Brabeck-Letmathe began
his career in Austria, before moving to Spain and Chile. Then after a
stint at headquarters, Letmathe was transferred back to Chile before
returning home again. Subsequently, Letmathe did stints in Ecuador and
Venezuela before returning to Switzerland to be groomed to take over
from his predecessor, Helmut Macher. Letmathe has remarked in an
interview, how Nestle employees have gradually come to accept the
importance of cross country transfers : “ I realize it is hard to
uproot your family and move every three or four years but we get at
least three or four people a day asking if they can go and work for us
somewhere else.” Companies
such as ABB seem to have taken special initiatives to promote a global
mindset among their employees. These companies believe and rightly so
that global managers are made and not born. Realizing that people of the
same nationality tend to have a natural affinity, global companies lay
great emphasis on mixed nationality teams. As in the case of Nestle,
employees in these companies are encouraged to work in different
countries and develop personal relationships with employees in these
countries. Former
ABB CEO, Percy Barnevik explained in an interview with the Harvard
Business Review in 1991: “That is why we put so much emphasis on teams
in the business areas. If you have 50 business areas (BA) and five
managers on each BA team, that’s 250 people from different parts of
the world – people who meet regularly in different parts of the world
– people who meet regularly in different places, bring their national
prospective to bear on tough problems and begin to understand how things
are done elsewhere. I experience this every three weeks in our executive
committee. When we sit together as Germans, Swiss, Americans and Swedes
with many of us living, working and traveling in different places, the
insights can be remarkable. But you have to force people into these
situations. Mixing nationalities doesn’t just happen.” Training
plays an important role in creating a global orientation among managers.
Most managers have the natural tendency to believe that the management
styles in their country can be taken with them when they are posted
overseas. Training can help these managers get a deeper understanding of
the customs and values of the country to which they are being
transferred. Before being asked to take up an assignment, overseas
managers need to be briefed thoroughly on what is expected of them. In
the absence of such a briefing, behavioural problems often result
especially if the manager has been recruited locally and not deputed
from headquarters. Orientation programs are also needed to help managers
improve their interpersonal skills for dealing with local people
belonging to a different culture. Some writers have pointed out that
expatriate managers have problems in adjusting, when suddenly vested
with power and prestige in an overseas subsidiary. Rude behaviour and
arrogance have also been reported in some instances. Moving
managers around is an expensive process. Substantial amounts of
expenditure are incurred by progressive MNCs in helping managers and
their families to cope with new business environments. It is also
reasonable to expect these managers to take time settling down into a
new job. While it is theoretically desirable to make as many managers as
possible gain cross country experience, time effort and money are
constraining factors. So, global organizations need to clearly define
their priorities. Consider a company like Ford. It may make sense to
single out managers from strategically important countries such as
Germany or Brazil for cross-country stints. Attempts
to spread a global culture in an organization need to be realistic and
kept within limits. Quite obviously, all the employees in a
transnational corporation need not have a global orientation. A core
group is needed to strengthen the global mindset. However, a vast
majority of employees, would still need to have a local orientation to
carry out day to day business functions. Both ABB and Nestle have
articulated this stand. According to Barnevik, “I have no interest in
making managers more global than they have to be. We can’t have people
abdicating their nationalities saying ‘I am no longer German. I am
international.” The world doesn’t work like that. If you are selling
products and services in Germany, you better be German.” In
the case of Nestle, the company has not been shy to declare its Swiss
background. According to
Letmathe, “Unlike US Companies which try to transform local hires into
American businessmen, we are not trying to export a lifestyle.”
“It would be foolish to pretend to be a Chilean company or a
Chinese company, just because we have a very strong local presence in
those markets.” In
the late 1990s, companies have been using new approaches to develop
global managers. As opposed to conventional and routine cross-country
transfers, companies are exposing managers to problem solving situations
in different business environments. An interesting example in this
context is Dell Computer (Dell). Traditionally, Dell’s practice has
been to use local managers to man its outfits in different parts of the
world. For important functions, Dell uses teams of specialists who move
around the world providing expertise in specific areas. One such team
which had picked up design expertise while setting up Dell’s
manufacturing facilities in Texas, has been spending time in countries
such as Ireland, Malaysia, China and Brazil to set up plants there. In
each of these countries, the team spends typically six months to one
year. Telecommunications
technology has created up new opportunities to recruit people locally
and yet get them adjusted to the company’s culture in quick time.
Microsoft, a company reputed for its smart hiring practices, largely
depends on foreign nationals while operating outside the US. According
to Bob Herbold, Microsoft’s Executive Vice President and Chief
Operating Officer, “You want people who know the local situation, its
value system, the way work gets done, the way people use technology in
that particular country and who the key competitor are. If you send
someone in fresh from a different region or country, they don’t know
those things.” To promote a global orientation among its employees,
Microsoft teams worldwide communicate by e-mail on issues ranging from
software development to worldwide licensing. One reason for
Microsoft’s choice of local managers for overseas assignments is of
course the fact that the company’s key product development activities
continue to take place in the US. Country subsidiaries play a
predominantly marketing role for which local hires make eminent sense. Gillette
is a company which has shown strong commitment to the development of a
global mindset among employees. In 1998, Gillette had 75 profit centres
where only half the managers were local staff. Of the remaining
managers, 15% of them had
worked for Gillette in at least three countries. Gillette’s approach
stems from the belief that sending headquarters executives to do stints
in country subsidiaries is not adequate. Gillette belongs to that small
group of global companies who are convinced about the need to have a
diverse executive team which can bring ideas from different parts of the
world and pool them to help the organization strengthen and renew
itself. One pitfall which companies have to get around as they
globalize is the headquarters mentality. The idea that headquarters
knows what is best and subsidiaries should concentrate on policy
implementation can be a major stumbling block to he spread of a global
culture. While it helps to standardize some value chain activities, it
is unrealistic to think that
different markets with varying consumer tastes and competitive pressures
can be managed from a distance. Shifting power from the corporate
headquarters to regional headquarters becomes necessary if the
company is serious about globalization.
While a headquarters
mentality, with its excessive centralization may not be appropriate, too
much autonomy to subsidiaries without balancing controls can lead to
indiscipline and lack of coordination. When we talk of controls, it is
tempting to equate them with systems and procedures. While efficient
reporting systems, training programs and a global matrix structure can
be useful, for truly global companies, a system of values is far more
important. As subsidiaries are given more independence, it becomes
important to ensure that the managers working away from headquarters
have fully internalized the company’s core values. Indeed, a global
company must be bold enough to withdraw from a market if it finds that
there is a conflict between the way local operations are managed and the
company’s core values.
In its early stages, when a company is relatively small, the core
values tend to remain informal and implicit. Most operations are in one
place and in many activities the CEO, tends to be directly involved. Due
to regular face to face interaction between the employees, elaborate
mechanisms to convey and make employees internalize the core values are
not really required. As the company’s operations become dispersed
however, companies have to work harder to make employees be more aware
of the company’s values. The channels of communication are more
difficult to maintain as operations become dispersed. In addition, ways
of doing business vary from country to country as the company spreads
its wings across countries. As Kenichi Ohmae explains, “As companies
become global, both problems take on greater dimensions. First, the time
and effort required to learn and maintain the organization's culture
reach a whole new order of magnitude. And second, the local aspects of
the shared values that once held things together now work to drive them
apart. Consequently, if these values are to stay meaningful, they must
be made explicit and they must be purged of their provincialism.
In other words, there has to be a coherent nationality less
mission statement in which the values can take root.”
Some analysts like Ohmae add that if a common thread has to run
through globally dispersed operations, the way businesses are grouped
needs to be changed. Traditionally, businesses have been grouped on the
basis of similarities in terms of customers and markets. The variation
in local environments has largely been ignored. Ohmae stresses the
compelling need to combine different businesses into “coherent culture
units that provide a common soil in which each business can flourish.” A strong national identity can lead to differing viewpoints. Having multiple national identities is a step forward but cannot be equated with a global identity. A truly global culture would obviously need to transcend the nationality of the headquarters as well as other countries. As mentioned by Percy Barnevik earlier in this book, even in the presence of a global culture, each national business would still be rooted in its local culture to the extent that local business conditions warrant. To promote a global identity, it is important to discourage nationalistic displays. It also helps to hold important meetings in different countries to make the subsidiaries more important. Bringing senior executives from the subsidiaries on to the parent company’s board can also be useful. Unilever for example follows the practice of taking CEOs of its Indian operations, after completion of their stint on to the Unilever Board in London. |