Archive for category: Global Business

A recent “Idea Watch” article in Harvard Business Review reported on some new research that Carol Dweck and her colleagues are conducting.  As some of you are aware, Dweck popularized the concept of “growth mindset” (versus a fixed mindset). People with a growth mindset, according to her early research, enjoy challenges, strive to learn and consistently, and see potential to develop new skills.  

Now she has been exploring the idea whether organizations can have growth or fixed mindsets. So far, her research seems promising.  She and her team have developed a survey that has been implemented among employees at seven Fortune 1000 companies. Employees rate the extent to which they agree with a series of statements, such as “When it comes to being successful, this company seems to believe that people have a certain amount of talent, and they really can’t do much to change it.”

Dweck concludes that there is a great deal of consensus about what the prevailing mindset is in these employees’ organizations with regard to growth.  Her research shows that employees in growth mindset companies are:

• 47% likelier to say that their colleagues are trustworthy
• 34% likelier to feel a strong sense of ownership and commitment to the company
• 65% likelier to say that the company supports risk taking
• 49% likelier to say that the company fosters innovation.

Similarly, I believe that organizations can be assessed on whether it has a global mindset culture, above and beyond the presence of employees who have the traits or qualities of an individual global mindset.  Of course, hiring and developing such individuals in your company is helpful, but can be inefficient since it may take companies a long time to reach the critical mass needed. Another approach therefore is to develop an overall strategy to build or improve the organization’s global mindset culture.  The first step in developing this strategy is to diagnose your company’s current state with regard to its global mindset culture. So here are eleven key indicators that will help you assess your company’s current global mindset culture.

1. Top management commitment to building a global mindset culture.  How regularly do the senior executives in your company reinforce the importance of thinking globally and recognizing the importance of markets other than the home market?  How often do executives travel overseas to learn about the importance of these markets – especially from their overseas subsidiaries? How frequently do managers and executives from overseas subsidiaries come to headquarters to participate in meetings?  Are key executives from overseas represented in important task forces and corporate initiatives?
2. Structures and processes for global alignment and coordination.  What formal and informal mechanisms has your company put in place to facilitate efficient and effective coordination across countries where your company does business?  How well defined are your company’s formal structures, such as matrix relationships, global and regional roles, and roles and responsibilities of headquarters and subsidiaries?  When global teams are created, how well represented are subsidiaries from relevant countries?
3. Infrastructures for global communication.  Has your company invested in the necessary technologies to enable efficient communication across countries?  And how much training and support is being provided so employees can take advantage of these new tools?
4. Assessment of global mindset potential.  How important does your company consider global mindset in selecting internal or external candidates for positions that will require cross-cultural interactions?  Is cultural fit one of the criteria used before assigning individuals to global roles?
5. Use of development assignments to build global mindset.  When setting development plans for individuals who may have high potential, what opportunities are provided for them to learn and acquire experiences in working across different markets and cultures?
6. Reducing the headquarters ‘center of gravity.’  Has your company considered relocating some key functions out of headquarters into one of its key markets overseas?  Are at least some of your company’s centers of excellence or expertise located overseas? Are regional heads and their staffs still based in headquarters or have they moved out to the regions?
7. Cross-cultural awareness and sensitivity as a key element in the company’s learning strategy.  How available and accessible are resources for employees to improve their cross-cultural awareness (e.g., on-line courses on doing business in different cultures, reimbursement for language training, etc.)?
8. A global talent pool.  How inclusive is your company’s global talent management process?  For example, when considering internal candidates for key positions, does the slate of candidates include highly qualified employees from different locations?
9. Recognition and rewards for those with global mindsets.  How valued are those individuals who have proven themselves in overseas assignments, not just in improving business results but also in being recognized as someone who has worked effectively with different cultures?  When these individuals complete their assignments, to what extent does your company leverage their experience? Does your company’s competency model and performance evaluation system include global mindset behaviors as a key element?

In a recent study by Price Waterhouse Coopers (Wang, 2014). 4,108 return migrants from 81 countries of origin who had spent between three months and two years in the U.S. at some point during the years between 1997 and 2011 under a category of the J-1 visa designated for professional training completed a survey.   These respondents all had bachelor’s or master’s degrees, and had work experience in many industries with companies such as Google and JPMorgan Chase, as well as thousands of small startups and midsized companies.

What did they find?  While almost all of the respondents reported having learned about practices overseas that they could implement in their home countries, only 67 percent reported having shared any of this knowledge upon their return. And only 48 percent reported having shared knowledge and then having seen this knowledge implemented.   The study concludes: This means that on average, for every two workers with international experience hired by a given firm, only one will successfully share knowledge from overseas at some point during his or her tenure.

Interestingly, countries like China, India and Brazil are creating incentives to entice their foreign-trained nationals to return.  A recent Wall Street Journal article described the emergence of these “sea turtles,” the term used for a Chinese native who is returning home after several assignments in the West.  The article mentions several such Chinese businessmen who, after working for multinationals like Coca-Cola and Nike in the U.S., have decided to return to China, often in much larger roles and with much greater compensation than they had in their former companies’ headquarters.  Aside from these considerations, there is the perception that the opportunities with a Chinese company are greater, as are the psychic benefits. For example, Guo Xin, a sea turtle who joined a Chinese recruiting firm, said, “You’re making global decisions rather than having these decisions made for you” by Western headquarters.  

1. Support for individuals on overseas assignments.  Does your company provide ongoing support for individuals on overseas assignments – before, during and after the assignment is over?  In Ernst & Young’s Global Mobility Effectiveness Survey (2013), they found that on average, 16% of assignees left the company within the first two years after repatriation, and a further 41% returned to their pre-assignment position.  Does your company require some form of cultural training for the individuals and their families prior to an overseas assignment. For example, BASF works with an outside vendor that helps international assignees adjust to their new surroundings.  The vendor also provides “cultural attaches” who will help BASF employees with the day-to-day logistics of settling in a new country, e.g., finding apartments, completing mandatory state registrations, setting up bank accounts, etc.

In another company, I helped develop an expatriate mentorship program whereby international assignees were assigned to senior executives as mentors, with the condition that these senior executives had to be outside these individuals’ functions.  For example, the CIO volunteered to mentor two individuals in Marketing and two managers in Finance who were all in overseas locations. He kept in contact with them throughout their assignments, and helped facilitate their transition back to their next assignments.

1. Formal and informal processes for sharing best practices globally.  When he was CEO of GE, Jack Welch was relentless in promoting knowledge management, and he held people accountable to make sure that they were proactive in communicating and sharing best practices.  How much sharing of information and best practices goes on internally in your company, and are there formal and informal mechanisms for facilitating the dissemination of these best practices? Somewhat belatedly, for example, GM has just begun to implement this.  In an interview with the Wall Street Journal (November 2, 2014), President Dan Ammann described what the company has started to do:

“A couple months ago we brought about 25 of the top sales leaders from around the world together in Charlotte, N.C.  We conducted workshops where each discussed the tactics they are using in their home markets to drive sales, work with dealers and interact with customers.  This is the first time anyone can remember that happening.”

Perhaps next time they should meet in Beijing, Sao Paolo, or Mexico City.

Once you’ve done your assessment, then you’ll have a better understanding of where the gaps are, and your organization can begin to prioritize actions to narrow these gaps, taking into account the organization’s overall strategic goals and where the best payoffs are.  For example, if the organization is planning a major expansion into China over the next three to five years, then assessing cultural fit among high potential employees (#5) and establishing an office in one of its cities (#6) should be high on the list of actions.

 

Bennett, J.  (2014). GM’s Ammann Drives for Change.  Wall Street Journal, November 12.

Chu, K. and Lublin, J.  (2014). Chinese firms bring more natives home.  Wall Street Journal, September 3.

Gupta, A. and Govindarajan, V.  (2002). Cultivating a Global Mindset.  Academy of Management Executive, 16(1), pp. 116-126.

Idea Watch.  (2014). How Companies Can Profit from a Growth Mindset.  Harvard Business Review, November, pp. 28-29.  

Wang, D. (2014).   The Untapped Value of Overseas Experience.  Strategy + Business: http://www.strategy-business.com/article/00283?pg=all.

Free food!  Subsidies for buying hybrid cars!  No lay-off policies! Paternity leaves!  Employee sabbaticals! No more performance appraisals!  The list of perks, benefits and organizational practices is almost endless, and as many managers know, simply benchmarking or imitating practices or benefits what some of the “great places to work” employers offer is no guarantee that these practices will work for your company.  And by what will work, I mean whether or not they will lead to outcomes that will improve organizational and business performance.

In my OB class recently, one of my students brought up the potential benefits of salary transparency, a practice used by a handful of companies but is certainly not widespread.  There are a few good arguments that can be made for this practice. After all, publicly traded companies issue annual reports showing the compensation of their most highly paid executives.  You can easily access the average salaries of different professional groups (including professors) in public universities. In sports, we can quickly find out what the salary is of every professional player, and what their bonuses are.  And, some would argue, taking the mystery and black box out of salaries might help employee morale.

In my view, here are five questions to answer before one should consider implementing a particular organizational practice in an organization.  You can easily remember these questions using the acronym FEDUP.

First is Fit.  How does the practice align with the organization’s strategy and culture?  Zappo’s and Southwest are two companies known for having a “fun” culture. Tony Hseih, Zappos’s founder, and Herb Kelleher, former Southwest Airlines CEO, deliberately try to create an informal, almost wacky, atmosphere in their companies.   One of Zappo’s core values is “to create fun and a little weirdness.” Herb Kelleher used to dress outlandishly and encouraged his employees to do the same. Now imagine implementing these “fun” practices in companies where the culture emphasizes seriousness and even frugality.  Several years ago, a global company that had instituted “casual” Fridays, where employees could dress more informally one day of the week, decided to implement the practice globally. I was in Tokyo when the employees of its subsidiary received the e-mail memo. “Salary men” in Japan dress very conservatively, often in dark suits and white shirts.  This is part of their identity and they take pride in being recognized as such. Dressing informally made no sense to them at all.

Second is Evidence.  What is the evidence that this practice has worked?  Is there a solid theory or framework behind it? Is it likely to work in different industries?  Is it likely to work in different cultures? Fads are common in business, and imitating what your competitors are doing is not unusual.  This is no reason to adopt the same practice in your organization. Even when there is solid research behind a practice (for example, Collins’ concept of Level 5 leadership in his book Good to Great), it does not mean that this should be applied indiscriminately.  

Third is Difficulty of Implementation.  What are the barriers to implementing such a practice?  How difficult (and/or costly) will it be to implement? Is the timing right for your company?  In Pfeffer’s classic article “Seven Practices of Successful Organizations,” he identifies one such practice as self-managed teams and decentralization of decision making as basic principles of organizational design.  According to him, “organizing people into self-managed teams is a critical component of virtually all high-performance management systems.” However, the examples he gives include companies that have implemented true self-managed teams (e.g., Whole Foods) as well as companies that have implemented only certain aspects of the self-managed team concept (e.g., Ritz-Carlton).  In fact, there are very few companies that have implemented true self-managed teams, while virtually all corporations today actually have some form of team concept. Why are self-managed teams not more pervasive in the work place? For one, it requires a level of maturity and autonomy among team members that may not be there. Google at one point tried to increase spans of control and remove managerial levels but decided that their work force needed managers – not so much to supervise and oversee but also to coach employees, many of whom are very technical but relatively inexperienced.  Second, when a company goes through a major crisis, as Siemens did a few years ago with its bribery scandal, its new CEO implemented policies and compliance procedures that required employees to adhere to strict ethical policies. The timing for self-managed teams would not have been appropriate for this company.

Fourth are Unintended Consequences.  Are there things that could go wrong with the practice that you may not have anticipated?  Many years ago, Stephen Kerr wrote an article called “On The Folly of Rewarding A, While Hoping for B.”  The fundamental concepts of that article are still relevant today. Creating practices that focus primarily on extrinsic rewards (e.g., bonuses, stock options, status in the organization) will tend to attract people who are extrinsically motivated.  These individuals, while they may performing well in the short term to get their rewards, will not likely develop strong loyalty to their organization and will not perform good organizational citizenship behaviors. They are likely not going to be interested in behaviors that do not lead directly to these extrinsic rewards.  Is this the kind of organization that you want to build?

Fifth is Purpose.  Are you clear on what you are trying to achieve with this practice?  And is the outcome linked to business performance? A few years ago, I was advising a company on whether it should implement Six Sigma.  Senior executives had heard about its success in GE and other companies, and they believed that it might have some benefit for the organization, which had been experiencing some challenges with customer service.  They were not sure that Six Sigma would work, so they decided to “pilot” it in one department. Supervisors went through training in statistical quality control, and applied some of the Six Sigma tools. There was some improvement but it did not last.  For practices like Six Sigma to work, it has to start at the top, and the “philosophy” has to be embraced by senior management. By viewing Six Sigma as simply a collection of techniques that could be implemented in pieces, this practice never gained traction and was ultimately abandoned.

So should a company consider implementing salary transparency?  Let’s apply the five FEDUP. First on Fit. If your company has a culture of openness, where status differences are minimized, and where gaps in salary levels are not outrageously skewed, then this might work.  But I doubt that there are many companies who fit this criterion. Second on Evidence. There is surprisingly very little research that has been conducted on the impact of salary transparency, although we can certainly come up with many arguments on both the pros and cons of this.  So let’s pass on the Evidence test since we just don’t have a lot of information either way. Third on Difficulty. Implementing this practice would require a tremendous investment in time on the part of executives, and extensive communication throughout the organization. Is the company prepared to do this?  Is the timing right, especially when there might be some inequities that might have to be explained, or at least corrected, before taking this step. Fourth on Unintended Consequences. Will revelations of everyone’s salaries create feelings of inequity and unfairness, and is the company prepared to deal with these consequences?  Fifth on Purpose. So why exactly would a company want to implement this practice? What does it hope it will accomplish? Will revealing everyone’s salaries indeed lead to higher morale and productivity? Given all this, I would submit that salary transparency is not a practice that should be implemented by many corporations today without a lot of careful thought.

 

Kerr, S.  On the folly of rewarding A, while hoping for B.  (1995). The Academy of Management Executive, 9(1), 7-14.

Pfeffer, J.  Seven practices of successful organizations (1998).  California Management Review, 40(2), 96-124.

When I was a young manager working for a Fortune 500 company, I signed up for a workshop that Stephen Covey was conducting at a conference center outside New York City.  I had just read his book, “The Seven Habits of Highly Effective People,” and wanted to learn more by listening to him live. He was a bit what I expected an author of such a book to be – sincere, straightforward, passionate about his beliefs.

When I learned that Mr. Covey passed away recently, I went back to this book that had such a profound influence on my professional life to see whether there were other insights I may have missed the first time around.  Over the years, I have always remembered to “begin with the end in mind” and to focus on the “important, and not necessarily the urgent” (although I have not always successfully followed this advice).

But something else struck me as I skimmed through the book.  In my classes in OB, I have interesting discussions with my students on what good OB practices are, and whether they can be applied to different companies in different industries.  One of the best articles on the subject is Professor Pfeffer’s “Putting People First for Organizational Success.” Here, he lays out seven OB practices that he claims have been proven to result in productivity and high performance.  They include selective hiring, employment security and self-managed teams. We have good debates in my classes as to whether these practices can apply to all organizations regardless of their situation, or to organizations in different parts of the world.

The “a-ha” for me was Covey’s insight that “Principles are not practices.   A practice is a specific activity or action. A practice that works in one circumstance will not necessarily work in another … While practices are situationally specific, principles are deep, fundamental truths that have universal application.”

There are many so-called “best” OB practices today that seem to work well for certain companies at certain times.  All you have to do is read the practices that Fortune describes in its annual Best Places to Work survey. Who does not know about Google’s free food, W. L. Gore’s self-managing teams, and GE’s Work-Out Programs, to name a few?

But Covey is right. Practices, including OB practices, are situationally specific.  Depending on the company’s strategy, its organizational goals, its cultural context, and its industry (among other things), these practices may or may not work.

But are there OB principles with universal application that lead to high performance and high commitment?  Based on my experience having worked for several different corporations, consulted with many others, having learned from some great minds in the field of OB, and having worked in many different countries, I would say there are at least five that I believe are universal.  First is to treat employees fairly and with respect. Whether it is a state-owned Chinese firm or a private enterprise in Brazil, organizations that uphold this principle will produce a higher level of commitment from employees than those that do not. The specific practices on how this principle is implemented will vary by culture.  In Western cultures, treating employees with respect might mean listening to their ideas. In Asian cultures, treating employees with respect might mean paying great attention to making sure employees do not lose face.

Second is to create a positive, motivating environment.  In Western cultures, this might mean such things as managers providing encouragement to employees, having an open-door policy, and conducting meetings where employees can express their opinions.  In Asian cultures, this might mean joining employees after work for karaoke, making sure they understand the history of the company, or even providing uniforms so employees can identify better with their company.

Third is to build self-confidence in employees.  Berating employees may instill fear and compliance but more than likely will build resentment and mere compliance, if at that.  We know from research that there is strong evidence of an “expectation effect” between teachers and students, as well as between managers and subordinates.  Sports trainers and coaches spend considerable amounts of time working on the mental aspects of the sport with their pupils, even with world-class athletes. In Western cultures, building self-confidence might mean giving some autonomy to employees or providing them with a challenging assignment.   In Asian cultures, this might mean offering them special titles or giving a team special recognition.

Fourth is to set high standards and expectations.   There is strong evidence from the research on goal setting that setting moderately difficult goals can be motivating.  GE popularized the practice of “stretch” goals. In Western cultures, setting high standards might involve meeting with subordinates to discuss goals and pointing to the alignment of these goals with department and company objectives.    In Asian cultures, this might involve having a senior leader of the company speaking to employees about the importance of meeting stretch goals for the good of the team and for the good of the company.

Fifth is to build collaboration and teamwork.  While talented individuals will continue to come up with inventions and innovations, breakthroughs today are more often than not the product of teams of individuals working together.  The image of the lone inventor or scientist toiling in isolation is somewhat exaggerated anyway; even Thomas Edison had a small team who worked with him to invent the light bulb. In Western cultures, building collaboration and teamwork might mean focusing on the right incentives and rewards to reinforce the right behaviors.  In Asian cultures, this might mean focusing on team-building to create a strong sense of group and company identity for employees, or on redesigning the work to build interdependence.

These are five principles that I believe represent good OB, are backed by years of research and that are universal.  However, let us also keep in mind, as Covey has wisely said, that principles are not practices. How these principles are applied and implemented will certainly vary and in this global world, Covey’s advice is worth heeding.