Banter Without Borders

Global Relocation: Executive Challenges

Contrary to Thomas Friedman's mantra of yore, the world is not flat. In fact, as the Financial Times commented in an August 28th editorial entitled “Rough and Smooth,”* “reality is more messy. Recent history is littered with tales of CEOs from one culture who, for whatever reason, have not stayed the course when put in charge of a company with deep roots in another.” Stuart Chambers aptly phrased it when he resigned as head of Nippon Glass: “I have learned I am not Japanese.”  

What executives must grasp is that the behaviors and attitudes that got them to the top in one culture would not necessarily translate when they assumed control of a company in another country. Culture does matter, and on several levels. For executives to succeed in crossing cultures, they must realize that the greatest attribute they bring to the table is not their previous successes or reputation; in fact, these can hinder their effectiveness in a new market. Their greatest strength in moving to a company in a different country is their ability to be nimble and adaptible, open to events as they unfold. As the Financial Times article concludes, “…there is no template for how to run an Asian business – or, for that matter, a British, French, or Russian one. Running any business requires political savvy and managerial flexibility, going outside one’s comfort zone simply requires a double dose. Different business cultures are there to be navigated, not flattened into mush.”

Every culture has its own set of values that govern not only management styles, but all aspects of business, from advertising & marketing to sales to R&D. And, the range of stakeholders, their attitudes and their issues may be quite different from anything the executive had previously encountered. Laws and regulations, investor relations, unions, employee behaviors, and corporate structures are seldom identical from one culture to another, and they seldom exhibit any degree of flexibility in the short term. So, it falls to the executive to be able to adapt to a very different environment if he or she hopes to achieve any degree of success in a foreign company.

Often, however, it is not the above-mentioned workplace related challenges, but the family issues that force an executive either to refuse a lucrative overseas position or to abort it. Family relocation issues can, for example, undermine the effectiveness of an executive when his loyalties and time are split between his family in one country and the company in another. The Japanese media often attacks Sir Howard Stringer for not spending enough time in Sony’s head office. Indeed, the importance of the family's success in managing the overseas move was given top billing in a recent Harvard Business Review* article on the subject. Simply put, "You can't be successful in your new role if your home life is in chaos." So obvious, yet so often overlooked.

Corporate boards of directors are surprised again and again by the failure of CEOs who have not succeeded in running a foreign corporation. The onus is on them, the board members, to be diligent in their search for the right executive, one who has not only the name recognition (the “his PR precedes him” syndrome) or the technical skills, but also an attitude of openness and flexibility, a satisfactory family situation, and a willingness to learn about new cultures. While that may seem an overwhelming task for a board, the consequences of not doing the requisite due diligence in their search can be even more daunting. However, finding the right executive for the right job with the right skills for a particular company and culture can send the company to new levels of success.

*http://www.ft.com/cms/s/0/673ce6aa-9406-11de-9c57-00144feabdc0.html

*http://hbr.harvardbusiness.org/2009/10/three-keys-to-getting-an-overseas-assignment-right/ar/1

Global Business: Can Nordic Model values be exported globally?

In an article entitled "Illuminating outline" in the July 30th edition of the Financial Times http://www.ft.com/cms/s/0/486b1160-7c83-11de-a7bf-00144feabdc0.html?nclick_check=1, Richard Milne and Andrew Ward write about the Nordic model of social capitalism. The writers describe small domestic markets driving an openness to globalization. They write of strong social protections and a deep sense of egalitarianism and equality, educational opportunities for all, and quota laws to ensure women get their fair share because "it is not who you are but what you can contribute." They go on to describe the much smaller gap between executive and worker pay and worker participation in the strategy of companies.

While this system may sound ideal to some, the authors also state that this Nordic model of social capitalism is difficult to export outside of the Nordic countries. It is difficult to export precisely because it is based on a strongly-held set of values by a relatively small, homogenous population. For those fond of the Nordic model, it is unfortunate that the world is a much messier place, comprised of a multitude of cultures that hold very different values, whether based on religion, geography, economics, or history, to name but a few influences. And, when you look at heterogeneous countries like the U.S.A., or even Canada, China or India with multiple cultural influences, the Nordic model becomes even more unsustainable.

Even in the Nordic countries, as our team confirmed when we were working in Sweden last autumn, the Nordic model is losing ground. An aging population is putting a strain on the social services available and creating a shortage of working-age contributors to the tax base without immigration. Meanwhile, immigration is eroding the homogenous values of these countries while raising their social costs, and suddenly you have the local population reexamining their attitudes to that Nordic model of social capitalism.

Consequently, there are a number of risk factors for any company going into another market. There is little likelihood of a shared set of values, beginning with something as seemingly simple, especially in the current global economy, as attitude toward work and leisure. Are employees gung-ho to get started every day or do they mark time till it is time to go home? Is overtime desirable or an infringement on personal time? And, what about attitudes to hierarchy? Do employees need command-and-control leadership or participative roles in management? What motivates them...the carrot or the stick? And, we haven't even begun to discuss issues of communication, regardless of the language or languages spoken.

Those are just a few of the more obvious issues confronting a leader confronting a different culture. Now, just imagine you have a global team comprised of people from a variety of cultures with numerous conflicting values, attitudes and communication styles. It can become a minefield for companies, leaders and their teams. As admirable as the Nordic model of social capitalism, the American model of management, the Japanese model of quality or any other economic or business model may be, the moment you move from a small, homogeneous group, culture rears its fascinating head and plays havoc...unless you have done your homework and are informed, adaptable and open to whatever may happen.