1. Chapter 10: Developing a Global Management Cadre
PowerPoint by
Hettie A. Richardson
Louisiana State University
© 2008 Pearson Prentice Hall

2. Maximising Global Human Resources
Use international cadre through career management to develop a top management with global expirience
Develop effective global management teams
Promote the role of women and minorities
Work with the host-country labor relations systems to ease the strategic implementation and higher the productivity
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3. The Expatriate Transition Process
Entry transition (initial confrontation)
Adjustment (adaptation)
Exit transition (anticipatory socialization)
Home country
Preparation
Entry transition (initial confrontation)
Adjustment (adaptation)
Exit transition (anticipatory socialization)
Host country
Adaption
The overall transition process experienced by a company’s international management cadre over time comprises three phases of transition and adjustment that must be managed. This first phase is exit from the home country, the success of which is largely determined by the quality of preparation the expatriate has received. The second phase is entry into the host culture, which is also comprised of entry, adjustment, and exit. The success of this phase depends largely on monitoring and support. The final phase is reentry into the home country or entry into a new host country, in which the level of reverse culture shock and the ease of re-acculturation will depend on the previous stages of preparation and support.
Repatriation
Entry transition (initial confrontation)
Adjustment (adaptation)
Exit transition (anticipatory socialization)
Home country or
New Host country
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4. Preparation, Adaptation, Repatriation
Reverse culture shock occurs because
Reintegration is difficult
Expatriates are often “out of sight, out of mind”
Feelings of alienation from “home”
Poor management of expatriates means fewer will be willing to take assignments
The ability to develop a global management team depends largely on the success of expatriates’ assignments, which in turn depend on the ability to manage transitions for the expatriate and accompanying family members. Effective management of a company’s global cadre does not end with the overseas assignment. It ends with successful repatriation. Proactive management should begin with the end of the current assignment in mind. Unfortunately, many companies do little to minimize the effects of reverse culture shock or plan for repatriation once an assignment is over.
It is unsurprising, then, that US employees commonly see overseas assignments a negative career moves. If managers lose out on promotion opportunities while overseas, few will be willing to take foreign assignments.
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5. Successful Repatriation Programs
Mentor programs
Career planning and guidance units
A system for maintaining contact with expatriates
Companies need to make the foreign assignment and reintegration process positive by using careful career planning, providing support to those overseas, and using the increased experience and skills of returnees to the benefit of the home office. Research by Tung indicates that successful repatriation programs should use one or more of the following practices:
A mentor program to monitor the expatriate’s career path while abroad and upon repatriation.
As an alternative to the mentor program, the establishment of a special organizational unit for the purposes of career planning and continuing guidance for the expatriate.
A system of supplying information and maintaining contact with the expatriate so that he or she may continue to feel a part of the home organization.
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6. The Role of the Expatriate Spouse
60% of expatriate spouses are employed before the assignment, but only 21% are employed during the assignment
Spouse adjustment is more likely when:
The firm seeks the spouse’s opinion
The spouse initiates predeparture training
Often the spouse of an expatriate also is a corporate fast-tracker, but few companies effectively address the needs of the spouse—as evidenced by this statistic from the 2005 Global Relocation Trends Survey. Yet, increasingly, if the spouse cannot find a position in the assignment location, the expatriate may turn down the assignment. It also is estimated that in 2000 about 25% of accompanying spouses were male.
Research suggests adjustment by spouses is more likely (1) when firms seek the spouse’s opinion about the international assignment and the expected standard of living and (2) when the spouse initiates his or her own predeparture training.
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7. Reasons for Poor Expatriate Retention
Expatriates are highly marketable
Overseas compensation packages are more generous than those at home
Expatriates feel unappreciated at home and on assignment
No one can better look out for one’s interests than oneself. Expatriates must ask themselves and their superiors what role each overseas stint will play in career advancement and what proactive role each will play in one’s own career. However, unless the company is effective at managing the careers of successful expatriates, it may lose valuable employees. Carefully managing the careers of expatriates can help a company retain people with increasing global experience and skills. The Global Relocation Trends Survey finds several reasons for high expatriate turnover rates:
Expatriates are more marketable and receive more attractive offers from other employers.
Expatriates find their compensation packages on overseas assignments are more generous than at home and go from one company to another to take advantage of that.
Expatriates feel unappreciated and dissatisfied both during and after the assignment and leave the company.
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8. The Role of Repatriation in Developing a Global Cadre
Successful expatriates acquire skills:
Managerial skills
Tolerance for ambiguity
Multiple perspectives
Ability to work with and manage others
Ability to do business overseas
Successful returning expatriates have developed knowledge and skills that are highly useful to their companies. For instance, Adler suggests skills include:
Managerial skills, not technical skills: learning how to deal with a wide range of people, to adapt to their cultures through compromise, and not to be a dictator.
Tolerance for ambiguity: making decisions with less information and more uncertainty about the process and the outcome.
Ability to work with and manage others: learning patience and tolerance—realizing that managers abroad are in the minority among local people; learning to communicate more with others and empathize with them.
In addition, expatriates learn how to do business overseas and about new technology, local marketing, and competitive information.
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9. Global Management Teams
The term Global Management Team describes
a collection of managers
in or from several countries
who must rely on group collaboration
if each member is experience optimum success and goal achievement
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10. Global Management Teams
The effects of multicultural teams:
Domestic: Mostly internal operations
International: Relationships among buyers, sellers and other intermediaries
Multinational: Internal, across culturally diverse managers and technical people
Global management teams are collections of managers in or from several countries who must rely on group collaboration if each member is to experience optimum success and goal achievement. The role and importance of international teams increase as the firm progresses in its scope of international activity. In domestic firms, the effects of multicultural teams are limited to internal operations and some external contacts. In international firms that export products and produce some goods overseas, multicultural teams and cultural diversity play important roles between buyers, sellers, and others at the boundary of the organization. For multinational firms, the role again becomes internal, with teams consisting of culturally diverse managers and technical people who are located around the world and are also working together within subsidiaries.
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11. Global Teams in the Global Enterprise
For global organizations and alliances, the same cross-cultural interactions hold as in MNCs, but considerably more interaction takes place with the external environment at all levels of the organization. Exhibit 10-2 illustrates that, when a firm responds to its global environment with a global strategy and then organizes with a networked “glocal” structure, various types of cross-border teams are necessary for global integration and local differentiation.
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12. Challenges for “Virtual” Global Teams
Geographic dispersal
Cultural differences
Language and communication
Technology
Virtual global teams represent a horizontal networked structure, with people around the world conducting meetings and exchanging information via the internet, enabling the organization to capitalize on 24-hour productivity. The advantages and cost savings of virtual teams are frequently offset by their challenges. For example, geographic dispersal can create complexity in scheduling teleconferences and videoconferences across different time zones. Dispersal also can make it difficult for members to develop trust, which is often best established in face-to-face interactions. Cultural differences, such as variations in attitudes toward risk taking, money, and scheduling, can create problems as well. Communication difficulties increase with language differences. These can be amplified because members cannot necessarily rely on nonverbal cues. Finally, challenges can arise when different members have access to different levels of technology.
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13. Future Needs for Virtual Training
How to lead a virtual team meeting
How to coach and mentor virtually
How to monitor team progress
How to use communication technologies
How to manage team boundaries
Rosen, Furst, and Blackburn conducted a study of 440 training and development professionals. The respondents indicated which training programs for virtual teems were most needed in the future. The full results are shown in Exhibit 10-4, but the top five needs are shown in this slide.
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14. Criteria for Evaluating Transnational Team Success
Do members work together with a common purpose?
Has the team developed a common language or procedure?
Does the team build on what works, learning to identify the positives?
Does the team spell out matters within the limits of the cultural differences involved?
Do members recognize the impact of their own cultural programming on individual and group behavior?
Does the team have fun?
Indrei Ratiu proposes using the following criteria (this and the next slide) to ascertain how well international teams are performing and what areas need to be improved.
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15. Managing Global Business Teams
Unfortunately, the actual level of global team success seems disappointing. 82% of managers studied by Govindarajan and Gupta say their teams fell short of their intended goals. Fifty-eight of the executives in the study ranked five key tasks based on their level of importance and also on how difficult it is to accomplish that task. The results are shown in this slide. Based on these results, the researchers suggest several things that can be done to improve global teamwork. Their suggestions include cultivating a culture of trust, rotating meeting locations, rotating and diffusing team leadership, linking rewards to team performance, and building social networks among managers in different countries. Other recommendation include drawing upon individual tolerance and self control, trial and error processes coupled with personal relationships, and setting up transnational cultures.
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16. The Role of Women in International Management
Research continues to show that women are disproportionately underrepresented in expatriate assignments. Opportunities for indigenous female employees to move up the managerial ladder depend on the given culture. For example, in Japan the workplace traditionally has been male dominated, with a working woman representing a loss of face to her husband. Increased global competitiveness has brought some changes, with more than 60% of Japanese women now employed. However, as this slide illustrates, Japanese women still represent only 8.9% of managerial workers.
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17. The Role of Women in International Management
Even US managers are reluctant to give women expatriate assignments
Evidence suggests foreigners are viewed first as foreigners
American executives are reluctant to give women expatriate assignments because they assume the women will be subject to the same biases as at home, or they assume a lack of understanding and acceptance in particular countries. The latter assumption is questionable, however. Research by Adler shows that, first and foremost, foreigners are seen as foreigners. A woman who is a foreigner is not necessarily expected to act like a local woman. Adler recommends that businesses (1) avoid assuming female executives will fail because of the way they are received or because of problems experienced by female spouses, (2) avoid assuming that a woman will not want to go overseas, and (3) give female managers every chance to succeed by giving them titles, status, and recognition appropriate to the position.
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18. Working with Local Labor Relations Systems
Labor relations and collective bargaining
Three dimensions to consider:
The participation of labor in firm affairs
The role and impact of unions
Human resource policies
The term labor relations refers to the process through which managers and workers determine their workplace relationships. The process may be through verbal agreement or through a union’s written labor contract, which has been reached through collective bargaining between workers and managers. The labor contract determines workers’ rights regarding pay, benefits, job duties, firing procedures, retirement, layoffs, etc.
The prevailing labor relations system in a country is important because it can constrain the strategic decisions and operational activities of a firm operating there. The three dimensions of labor-management relationships that the manager will consider are (1) the participation of labor in the affairs of the firm, especially as this affects performance and well-being; (2) the role and impact of unions in the relationship; and (3) specific human resource policies in terms of recruitment, training, and compensation.
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19. Working with Local Labor Relations Systems
Labor relations constraints:
Wage levels set by unions
Limits on the firm’s ability to vary employment levels
Limitations on the global integration of operations
Example: Europe
Constraints include (1) wage levels that are set by union contract and leave the foreign firm little flexibility to be globally competitive, (2) limits on the ability of the foreign firm to vary employment levels when necessary, and (3) limitations on the global integration of operations of the foreign firm because of incompatibility and the potential for industrial conflict. As an example of these constraints, European businesses continue to be undermined by their poor labor relations and by inflexible regulations. As a result, businesses move jobs overseas to cut labor costs. In turn, unions refuse to grant any concessions in employment protection and benefits to keep jobs at home. The situation may be beginning to change some, though.
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20. Organized Labor Around the World
Union membership is in decline
Industrial, craft, conglomerate, and general unions
Labor unions must be understood within their given contextual environment
The percentage of union membership in industrialized countries has declined over the last decade, particularly in Europe (though it does remain quite high overall, especially in Italy and the UK). There are several reasons for this decline: the increase in white-collar and service workers, a rising proportion of part-time and temporary workers, offshoring of jobs, and reduced belief in unions by younger workers.
Traditional union structures in Western industrialized societies have been industrial unions, representing all employees in a specific industry, and craft unions, based on certain occupational skills. More recently the structure has been conglomerate unions, which cut across industries, and general unions, which are open to most employees within a country. In the US, most unions are national and represent specific groups of workers. Alternatively, in Japan, it is common for a union to represent all workers in a company.
Labor relations systems across countries must be understood relative to their context—e.g., in terms of government regulation, economic factors, technological issues, and the influence of religious organizations. For example, collective bargaining in the US refers to negotiations between a labor union local and management, resulting in detailed agreements. In Europe, collective bargaining takes place between the employer’s organization and the trade union at the industry level. There are also differences in resulting agreements. In the US agreements are usually written and legally binding. In Britain, France, and Italy, agreements are often informal and verbal.
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21. Management Focus: China Empowers Unions
The “iron rice bowl”
China is adopting a new law to empower unions and protect workers’ rights
Foreign companies operating in China are protesting this move
Under China’s “iron rice bowl” system of the 1950s and 60s, all workers were protected by the government or by state-owned companies, which often supplied housing and local health coverage. However, in the 1980s, when China began introducing market forces, many of these protections were eliminated. Now, fearing social unrest in the face of a widening income gap, the Chinese government is planning to adopt a new law that will protect worker rights by giving labor unions real power for the first time since market forces were introduced. At the same time, foreign companies are protesting this law because they are concerned about the constraints that will accompany it (e.g., difficulty laying-off employees or firing them for poor performance). Additionally, rising labor, energy, and land costs suggest doing business in China is likely to become more expensive. Debate about the new law has pitted the American Chamber of Commerce against the All-China Federation of Trade Unions, the Communist Party’s official union organization. Some argue that American resistance to this law “flies in the face of the idea that globalization and corporations will raise standards around the world.” If approved, the law could dramatically alter the labor market and push up wages. The question is, though, whether the new law will truly be enforced. Consequently, opponents suggest simply enforcing existing labor laws might be more effective than adopting new ones.
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22. Convergence in Labor Systems
Forces for convergence:
Merger of ICFTU and WCL
MNC desire for consistency and coordination
Increased monitoring of labor conditions
Political and cultural shifts
The merger of two of the world’s largest labor unions to lobby for common labor standards in multinational companies confirms movement towards convergence. The International Confederation of Free Trade Unions (ICFTU) represents 215 national groups in developed economies, and the World Confederation of Labor (WCL) represents 144 groups in Europe and Africa. Other forces for convergence exist as well. For instance, MNCs often seek consistency and coordination among their foreign subsidiaries, thereby “exporting” new forms of industrial relations practices around the world. Similarly, there are many organizations who are monitoring labor conditions worldwide (e.g., ICFTU, WCL, the International Labor Organization). These organizations provide labor unions and firms with information about differences in labor conditions around the world. Political and cultural shifts also play a role. Exhibit 10-8 also mentions global competitiveness, new market economies, Free-trade zones, and technological standardization.
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23. Divergence in Labor Systems
Most MNCs still adapt practices to national traditions
The role of political ideology, overall social structure, and history of industrial practices
Despite the forces for convergence, for the most part, MNCs still adapt their practices largely to the traditions of national industrial relations systems, with considerable pressures to do so. Political ideology and the overall social structure and history of industrial practices are strong forces for a localized approach to labor relations.
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24. NAFTA and Labor Relations in Mexico
Labor issues subject to review under NAFTA: minimum wages, child labor, and safety
Workers believe MNCs use blacklists, intimidation and economic pressure to oppose union organization
Example: General Electric
Although about 40% of Mexico’s total workforce is unionized, government control over union activities is strong, and union control over members remains weak. By law, MNCs are required to hire Mexican nationals for at least 90% of their workforce, with preference for union personnel. In reality, though, the government allows exceptions. The Mexican government wants to continue to attract foreign firms, and many Mexican workers believe that MNCs exert inappropriate pressure on unions and union members and organizers. For example, GE has been accused of firing employees involved in organizing a campaign for the Authentic Labor Front and of blacklisting union activists. Despite formal complaints filed by the Teamsters and the United Electrical, Radio, and Machine Workers Union, the National Administration Office (set up by NAFTA to monitor labor policies in member countries) found them to be unsubstantiated. They ruled that neither the NAO nor its Mexican counterpart could punish other nations for failing to address union-organization rights.
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25. Comparative Management in Focus: Labor Relations in Germany
Codetermination law (mitbestimmung) is coming under pressure
Union works councils are “co-managers”
German unions are increasingly willing to make concessions
Linde and IG Mettal
Codetermination refers to the participation of labor in the management of a firm. The German law mandates representation for unions and salaried employees on the supervisory boards of all companies with more than 2000 employees and “works councils” of employees at every work site. The works councils play an active role in hiring, firing, training, and reassignment during times of reorganization and change. Their role is so extensive, they are often described as co-managers of the internal labor market. This situation has important implications for how managers of MNCs plan to operate in Germany. For example, the metalworking trade union IG Mettal negotiates guidelines regarding pay, hours, and working conditions on a regional basis. Works councils use those guidelines to make local agreements. Management and workers tend to work together because of the union’s structure—whereas they tend to be more adversarial in the US. Among the powerful effects of union participation are short work weeks, long vacations, and high pay.
Under pressure from global competition, German unions have incurred large membership losses in the last decade. As a result, they are more willing to make concessions and trade flexibility for increased job security. For example, when German engineering group Linde decided to build a factory in East Germany to take advantage of lower wages there, IG Mettal decided to match the savings by allowing longer working hours and taking less pay. Linde decided not to move to East Germany.
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26. Comparative Management in Focus: Labor Relations in Germany
The influence of Daimler-Chrysler and the US
The German model holds that competition should not be based on cost
What is the value of codetermination?
Daimler-Chrysler is another good example of how things are changing. In 2004 the company, which represents about 13% of the DAX index, exerted pressure to bring down high labor costs and taxes in Germany. US shareholders and managers hold some power to bring about change and reduce operating costs in the company. Also in 2004, IG Mettal agreed with Daimler-Chrysler to accept smaller raises and increase working hours after the company threatened to move 6,000 jobs elsewhere.
Another influence is the German model, which holds that competition should be based on factors other than cost. That is, the higher wage level in Germany should be offset by higher-value goods which have been the hallmark of Germany’s products. To the extent that German unions have established the high-wage, high-skill, high-value-added pattern, so have the established dependency on it. Consequently, German auto firms are in the process of moving toward the Japanese model by reducing supplies and cutting costs to compete on a global scale.
Conflicting opinions over the value of codetermination are increasingly evident. A major concern is that companies will be discouraged from doing business in Germany or with German companies if they have to incorporate codetermination.
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