CH. DEVELOPING A GLOBAL MANAGEMENT CADRE

1. CH. DEVELOPING A GLOBAL MANAGEMENT CADRE By. Helen Deresky

2. I. OLEG AND MARK – EQUAL WORK BUT UNEQUAL PAY • A. EQUAL WORK • Both 30 years old, same college degrees, same job • Ex-pat and local work long hours, same meetings • Like each other and firm and the job they do • B. UNEQUAL PAY • Mark, the ex-pat gets car, apartment, and vacations free • Oleg, the local, uses subway, shares apartment, no vacations • Mark earns $6,000/month • Oleg earns $200/month

3. C. MARK • Gets market rate in US; “We’re here because of cheap labor.” • D. OLEG: gets paid more than local companies pay • E. CALIBER OF PEOPLE • Only source of competitive advantage • Of 100 UK firms, 63 had failed foreign assignments • F. INTERNATIONAL HUMAN RESOURCE MGT • Selection • Training • Acculturation • Evaluation • G. OVER 300,00 US EX-PATS • Need to know how to manage in another culture • H. OVER 73 MILLION MNC EMPLOYEES

4. II. STAFFING PHILOSOPHIES FOR GLOBAL OPERATIONS • A. ETHNOCENTRIC APPROACH • Use parent-country nationals (PCNs) or home country manager • Advantages • Know company and way company doesbusiness • Loyalty • Disadvantages • Don’t know local culture • Blocks local manager’s advance in firm • B. POLYCENTRIC STAFFING APPROACH • Use local managers – host country managers • Advantages: know culture, lower cost • Disadvantages: poor coordination, availability

5. C. GLOBAL STAFFING APPROACH • Best managers recruited from in/outside firm • Advantages • Create pool of experienced international managers • Third country managers (TCNs) – more culturally flexible • Cost effective • Transpatriates – seems to be a trend • Disadvantage • Availability of qualified managers • Dual careers • Cost and time constraints • D. REGIOCENTRIC STAFFINGAPPROACH • Hire from region • Not always available

6. III. GLOBAL SELECTION • A. DETERMINANTS OF APPROACH • Approach should support firm’s strategy • Degree of internationalization of host country • Availability of qualified managers • Shortage of skilled managers can impede firm’s plans • B. SELECTION OF PERSONNEL • Cross-cultural awareness = cultural empathy • Interpersonal skills • flexibility • Technical expertise • Family’s ability to adjust • The more rigorous the selection process, the lower the failure rate

7. C. PATTERN • First, firms go abroad using own managers • Then, firms train local managers • May gradually become global staffing • D. PROBLEMS WITH EXPATRIATION • Family/spouse doesn’t adjust • Consider assignment needs (as opposed to HQ needs) • Inadequate preparation • Lack of support from HQ • Inability to adapt to local culture • Insufficient compensation • Poor career support

8. IV. TRAINING AND DEVELOPMENT • A. TRAINING FOR CROSS-CULTURAL INTERACTIONS IS CRITICAL • 40% of expats end early because of inability to adapt • 50% of those who remain are marginally effective • Costly • B. COMPLAINTS • China: food (duck tongueand pigeon head) • Brazil: home phones don’t work • India: poverty and street children are overwhelming • Indonesia: landlords demand rent 2-3 years in advance • Japan: doctors reveal little to patients

9. C. MISTAKE • Assume managerial style is universal • D. JAPAN HAS LOWER FAILURE RATE • Considerably more training = less 5%return • Families stay home • Stay is longer = 5 years • Plenty of support from HQ • E. CROSS-CULTURAL TRAINING • Learn language • Culture shock – anxiety of not knowing new culture • Honeymoon – excitement of new place • Irritation and hostility – problems at work, home, daily life • Gradual adjustment – understand and predict behavior • Biculturalism – function effectively in both cultures

10. Subculture shock – going to another region, NYC to Texas • F. TRAINING TECHNIQUES • Area studies • Culture assimilators: kinds of situations • Language training • Sensitivity training • Field experiences • Host family surrogate • G. INTEGRATING TRAINING WITH GLOBAL ORIENTATION • Types of training should match stage of globalization • Export – low, global stage - high

11. H. TRAINING HOST COUNTRY NATIONALS • V. COMPENSATING EXPATRIATES • A. ATTRACT, RETAIN, MOTIVATE • Costs $300,000 abroad • Hard to do this across across countries • Different costs of living • B. KEEP EXPAT WHOLE • Pay expat equivalent to home marketplus compensate for additional costs incurred • Balance sheet approach • Equalize standard of living between host and home country • Add compensation for loss • Tax equalization: expat avoid paying extra taxes

12. C. COMPONENTS OF COMPENSATION PACKAGE • Salary • Which currency? • Inducement payment • Taxation • Tax equalization • Tax protection • Benefits • Home country program • Local program • Social Security program • Allowances • COLA; perquisites • Housing standard • Education • Relocation; shipping, storage • Home leave

13. VI. COMPENSATING HOST COUNTRY NATIONALS • A. DILEMMA – NO SYSTEM FAIR • Have to pay Mark high or he won’t go • Can’t pay Oleg high or cost structurenot competitive • Firms can’t equalize pay, just pretend • B. POLICIES DIFFER • China • Opposed performance based pay • Can attract managers with housing • Japan: moving towards competing for jobs, performance based pay • Bulgaria: attract managers with cars and cell phones

14. VII. DEVELOPING A GLOBAL MANAGEMENT CADRE • A. PREPARATION, ADPATATION, REPATRIATION • Reverse culture shock: when go home • Manager may not have job or be left behind • Financial loss • Social alienation • Need repatriation program • Mentor • Trips home • System of supplying info aboutfirm to expat

15. B. ROLE OF THE EXPATRIATE SPOUSE • “Trailing spouse” needs training • Trailing spouse needs job • C. EXPATRIATE CAREERMANAGEMENT • Establish support services for • Exit transition from home country • Entry transition to host country • Entry transition back to home country • D. ROLE OF REPATRIATION IN DEVELOPING A GLOBAL MANAGEMENT CADRE • Many managers leave after int’l assignment • Want to integrate knowledge of foreign assignment • Want managers to share new skills • Use deliberate repatriation process

16. E. GLOBAL MANAGEMENT TEAMS • Must rely on teams for individual success • Critical for success of firm • Can use conference calls instead of travel • Create pockets of cross-cultural teamwork • Virtual global teams: internet • Building global teams • Integrate diverse pool of cultural values • Attain cultural synergy • Advantages: more ideas, better problem solving, innovation • Disadvantages: communication, stress, decision-styles

17. E. ROLE OF WOMEN IN INTERNTIONAL MANAGEMENT • Women’s opportunities differ by country • Japan: male domain, women leave to have family • US: only 6% of expats are women (25% managers women) • US assumes women and minorities will be less successful • Research does not support this