Developing Global Mindset through HR Strategies
Although it may seem obvious that global firms will need more and more managers with “global brains,” translating this attractive vision into an operational reality is not simple. First of all, does every manager need to be “global?” Who really needs global brains and to what extent? Managers are not “born global”; they acquire global brains through a series of experiences, many of them at a substantial cost to the organization. What is the return on investing in developing people with global brains? Making a rational business case concerning the future need for and use of global managers is one of the critical strategic decisions companies face as they expand globally. But once the case has been made, how does one go about developing this global mindset?
Developing and supporting the global mindset is one of the foundations of global HR management. Indeed, data from our research strongly indicate that the presence of global HR policies and practices, as perceived by managers around the world, positively impacts acceptance of globalization. In particular, staffing strategies, leadership development, and performance management are three global HR management tools with the greatest potential for powerful leverage.
Demand-Driven or Learning-Driven Assignments?
Perhaps the strongest mechanism for developing global mindset is international assignments and international experience in general. There is a great deal of evidence that global mobility enhances the opportunities to develop a global mindset (although not everyone who frequently moves across country boundaries necessarily fits the characteristics of a global manager). The classic study by Edström and Galbraith has already shown how transfers socialize people into the dilemmas and challenges facing the firm, thereby powerfully building the matrix into the mind.[18]
At the same time, socioeconomic and cultural trends around the world point to increasing barriers to cross-border mobility: dual-career families, parental care needs, children's education constraints, the equalization of economic opportunities reducing incentives to move. These are all factors that may diminish the desire of employees to actively seek out international assignments. In response, global organizations will have to become more and more creative in finding suitable alternatives to mobility, especially for senior managers. With flat organizational hierarchy supported by advances in modern communication technology, the traditional country-based job boundaries will begin to disappear, stimulating demand for positions with multicountry responsibilities.
Despite the increasing barriers to mobility, cross-border transfers are likely to remain the critical building block for enhancing global leadership skills. However, the nature of international assignments will change dramatically. In the past, they were mainly demand-driven, filling positions where there was insufficient know-how locally or where the authority of the center needed to be maintained. In other words, international managers were teachers, transferring capabilities and maintaining order. Given the expense, the emphasis on limiting the number of “teaching” expatriates was only natural. In future, the international assignments will become much more learning-driven. With localization and increasing sophistication of labor markets across the world, there is less need for knowledge transfer from the center. Many expatriates will be learners, not teachers. They will learn through experience about market and cultural differences, while developing long-lasting networks of relationships. They are also likely to come from many parts of the organization, not just from the mother country.
Global assignments should therefore become an integrated part of the career planning and development process. However, in contrast to past patterns of expatriation, the learning-driven global assignments should occur relatively early in an employee's professional career, when the learning impact is likely to be greatest. Transfers of young employees are also less costly and easier to implement from a career and family point of view. They will involve rotations across the whole global network, not just the traditional exchanges between the corporate center and country affiliates. Travel, short-term assignments, advisory visits, and best practice and study tours will also greatly increase.
One important caveat on the effects of international transfers: Data from our research showed that expatriates were far more balanced in their perspectives than their domestic counterparts, showing a high degree of understanding of the interplay between global and local forces and of the need for worldwide coordination. However, six months after expatriates returned from an assignment, there were no significant differences in mindset orientation between them and those who had never left home. At the headquarters, the roles, responsibilities, and corresponding performance criteria were heavily skewed to the global at the expense of the local. Repolarization of the mindset appeared to follow quickly. Mobility is not enough for balanced mindsets, if performance management does not support it. Adjusting performance management metrics was therefore one of the key steps taken by top management as they pushed for more balanced perspectives.
Cross-Border Project Teams and Task Forces
Transfers develop the network of critical ties that come to constitute the nervous system of the firm. Much of the communication in the transnational is informal, not prescribed, often based on a cross-border personal network of relationships that came about through international assignments, as well as steering groups, project teams, and action learning. These informal global networks supplement formal communication and can provide managers with rapid access to necessary information and, even more important, resources.
However, although international transfers (increasingly, learning-driven ones) are likely to remain a critical building block for developing global mindset, they are expensive and reserved for the select few with clear technical or leadership potential. An equally important building block, and one that is increasing dramatically, is cross-border project work. In different shapes and forms, project work has become the prime tool for coordination. Because cross-border projects are tools to work through local–global and related problems or opportunities, they are an excellent way of developing global mindset—perhaps the most important instrument for the future. The very purpose of the project group (or cross-border steering group or internal board) is to bring different perspectives to bear on a problem or opportunity.
Through project work, people learn a set of skills that underlie global mindset: the ability to work with people who have very different perspectives, how to set goals on important but ambiguous tasks, how to work through conflicts, and the like. It could even be argued that no one should move into a position of technical or managerial responsibility in a multinational organization without proven experience and demonstrable results in cross-border project work.
Leadership Development for Global Mindset
Many companies today use in-house training as a vehicle to speed up the dissemination of global mindset. At the heart of training in global mindset are projects, experiential methodologies, and action learning. It is the exchange and confrontation of different perspectives that leads to an understanding of the dilemmas of global management. The globalization process at General Electric is a good example.
Part of the GE transformation under Jack Welch was to make GE a company that operated globally, taking advantage of the growth and profit opportunities outside the United States. Recruiting abroad was one obvious response, but it was clear that it would take time to give the new recruits the exposure and experience they needed to be effective as GE leaders. Simultaneously, many GE managers who had operated only in the United States up until then had to master the ground rules of working internationally. To address these two developmental issues, GE's corporate management development staff designed a series of short, intensive, and experiential action learning programs with the aim of fostering the globalization of GE.[19]
As part of these programs, multicultural action learning teams of GE managers were sent to China, the former Soviet Union, and India to work on specific GE problems in these regions as well as to collect information on GE's best and worst practices around the world. The teams immersed themselves in the issues relevant to each region and reported on their findings, outlining business opportunities for GE to the company's top management. Even today, 10 to 15 years since they took part, many of the former participants reflect on their “global leadership” training as one of the most influential events of their careers.
Can people change their way of thinking in such a short period? A typical program lasted only about four weeks, but the stakes and tensions within teams were high—the unspoken perception was that the credibility (and future career prospects) of team members depended greatly on the quality of the final output. It was clear to everyone that reporting to Jack Welch that the team could not reach a common solution was not an option. Pie-in-the-sky planning was also not advisable, as the hottest business prospects were usually assigned to the team members to implement. Why was the training successful? Careful selection of participants, real work, stretch goals, and personal commitment of top management to mentor and coach all contributed.
Global firms will increasingly rely on flexible networks of relationships to foster global integration and coordination. Training that enhances global mindset should therefore be targeted at a broader cross-section of employees. In addition, a significant component of developmental activities should focus on the socialization aspects of leadership development. The purpose should be to create and enhance relationship networks and support the sense of common purpose, trust, and cooperation among employees across the whole global organization. Again, facilitated joint projects are probably the best tools to accomplish this objective.
Performance Management
Just as skill training that is not closely connected to the challenges of a job is unlikely to be transferred, so the development of global mindset through assignments, projects, and training is unlikely to be effective unless it is reinforced by other organizational processes. After all, the old maxim of “what gets measured, gets done” does not change in the global era.
In most global firms, different units of the organization have different strategic priorities, and thus different performance indicators are given different weight. However, having some common performance metrics and at least some common objectives facilitates the resolution of conflicts across boundaries. In the telecom equipment firm introduced earlier, giving managers in local subsidiaries and product managers in global business lines shared P&L responsibility was a major driver for mindset change. But setting targets is not enough. Given its decentralization of accountability to local units, the transnational needs to emphasize the importance of objective setting and appraisal, as well as obtain the buy-in of senior management in the subsidiaries to how it should be executed in practice.
A well-designed performance management system in a global firm is in itself a good example of balanced thinking. Often, measurement and control systems are seen as the opposite of decentralized responsibility. But the polarity is not absolute. For example, the main role of ABB's ABACUS—an acronym for the ABB Accounting and Communication (not control!) System—is to communicate useful operating level information to managers who need it as quickly as possible. In fact, ABB's ABACUS is designed to allow decentralization to work responsibly, providing prompt, timely measurements of all aspects of operational performance. In so doing, its aim is to (a) help local managers identify and diagnose problems and (b) allow top managers to monitor that performance. Their aim then is to help rather than interfere: “What's the problem? What are you doing to fix it? And how can we help?” Help means helping people to help themselves. It is only if they cannot help themselves that the control system leads to intervention.
Finally, to the extent that performance management and appraisal processes are rigorous, a powerful additional pressure for developing global mindset comes from what is called anticipatory socialization. As managers move from a local subsidiary role to a regional or global coordination role, they know that they may inherit any problems of excessive localization in their next job. The career prospects of the foreign assignee hang on his or her being able to satisfy the performance requirements of the subsidiary, the demands of headquarters staff, and perhaps those of his or her mother country. It is an excellent training in global mindset.