Building relationships and scouting for talent

Global Leadership. Building connections, scouting for talent and leading global teams

Today, no medium or large company can afford to remain within the borders of their country. If your competitors go global and you don't, they will benefit from greater scale and faster growth. As they get bigger and stronger, they will have more opportunities to attack you, and even your entire market.

Building relationships and scouting for talent

While global expansion is now needed, it has its opposites. Along with its benefits, it requires businesses to deal with unfamiliar territory, including language, culture, and political systems. In this article, you will learn how you and your colleagues can benefit from globalization by effectively managing risks and challenges.

Fundamentals of building a global organization

Globalization has its advantages, but also its costs. Some succeed and some fail, but who moves forward and who stays in place depends on whether the benefits of global expansion can outweigh the costs. Let's look at some of the possible benefits of globalization.

First, it is faster growth. The United States accounts for about 23% of world GDP, about the same for European countries, so global expansion provides the largest companies with the opportunity to grow faster than by fixing only in their own market.
Secondly, economies of scale and many factors, including research and development, sourcing, manufacturing, IT systems, and so on. This can lower a company's cost structure and increase its global competitive advantage.
Thirdly, the specific advantages of different countries should be used. For example, most iPhones are assembled in China due to lower labor costs, and Google has one of the largest R&D centers in India due to having a large pool of well-trained IT professionals.

Fourth, promote innovation. Because markets are rarely the same, each forces companies to act differently.

Now let's look at the costs and challenges of globalization.

First, there is a greater risk of unforced errors because foreign countries differ from the home market and from each other in terms of language, cultures, per capita income, and political systems.
Second, running a global company can be challenging for a variety of reasons, the most important of which are the geographic distance separating the various operations departments, as well as language and cultural differences. This complexity can slow down managerial decision making .
Thirdly, there are no quick payouts. Exceptions aside, organizing operations , building a brand image, and fighting competitors take time and money. This time around, the time difference between upfront costs and long-term payouts becomes a major issue if the company's investors get impatient.

Distance between countries is the biggest problem for any global company. If your company is successful in a large domestic market such as the US, China or Japan, you already know how to operate on a large scale. But domestic success does not necessarily prepare a company for global success. By distance, we mean geographic distance as well as other types of differences that separate countries.

Geographical distance is the most obvious. The greater the geographical distance between home and host country, the less frequently company executives will be able to visit this country. As a result, there is a risk that their understanding of local trends will be superficial and outdated. Their relationships with local political leaders and local managers will also be superficial and weak.

Next comes the language distance . Despite the fact that English is becoming an increasingly popular language around the world, but even today, senior managers in countries such as Latin America, China, Japan, Russia believe that they do not speak English well. Language distance increases the risk of poor communication and misunderstandings. It also reduces the likelihood of deeper, unstructured communication to resolve problems.

Cultural distance refers to differences in the widely shared norms, values, and assumptions of two or more societies. Cultural distance matters because looking at the same context, people from different cultures can interpret things differently and come to different conclusions about what they should do.

Economic remoteness , as a disadvantage, is the difference in size, growth rate and per capita income in different countries. Finally, there may be differences in political institutions and government regulations .

In terms of political systems, the US and the EU are very similar, but very different from China and Russia. As a result, companies may require different approaches to dealing with government in different markets, as well as changes in some characteristics of their products, processes and business models.

Whether a company operates in five countries or fifty, corporate leaders must decide how best to organize the various functional activities such as research and development, manufacturing, marketing, sales, after-sales service, and so on. Without the right organization, a company may not realize potential economies of scale or adapt to local market conditions.

For each functional activity, the main question is whether these activities should be concentrated in one place or distributed over several places, and if so, how much and where? A related question is how closely to coordinate these activities, which are dispersed in different places.

The correct answer almost always varies depending on functional activity. It often also varies by industry. For each functional activity, organizational leaders must choose one of four models:

The first model is full centralization in one place. This model is best suited when economies of scale are extremely important and global standardization is paramount.
The second model is the creation of differentiated global centers. This approach is ideal when global centralization is critical, but the best talent or other key resources are not available in any one place. In this case, it is best to break the functional activity into a small number of separate parts and concentrate each part in the most suitable place for it.
The third model is globally coordinated regional or local centers. Here you need standardization of production technology: a centralized search for equipment, the exchange of best practices, etc.
The fourth model is the organization of functional activities through the creation of regional or local centers with almost complete autonomy. This is similar to the third option, but with one significant difference. In this case, there is no reason for any coordination between locations.

As you can see, there is no universal best way to organize every functional activity in the global arena. The choice of four different models depends on the importance of global economies, the need for global standardization, and the possible benefits of coordination between centres.

Local capacity development

No company can take a leading position in a foreign market if it does not constantly monitor the realities of the local market. But how can a company increase its chances of fully adapting to the realities of the local market? Relying heavily on local residents to lead local operations departments.

But even when top management hires the right locals, they face a dilemma. Both sides can look at the same reality differently. If a company's management cannot make the right decisions quickly, then local leaders will see the company as being too slow. The solution to the dilemma lies in the appointment of a local leader, deeply rooted both in the local reality and in the corporate headquarters.

The local management team plays a critical role in shaping the company's success in the local market. While global strengths in areas such as technology, brand image and product lines matter, they are not enough on their own. The local team plays a major role in turning these strengths into success in the local market.

An all-local team has the advantage that they will be very knowledgeable about the realities of the local market and will be able to make the necessary connections. But there can be a huge gap between the local team and company leaders in understanding the opportunities and developing the best strategy for the local market. The result can be slow decision-making and indecisive strategic moves.

On the other hand, a team of overseas leaders will benefit from easy communication and existing trust with corporate leaders. Decision making can be fast. But such teams run the risk of being superficial in understanding the realities of the local market. As a result, often a global company remains at best a niche player and never becomes a market leader.

The optimal composition, as a rule, will include both local and foreign citizens. These two groups of managers have complementary strengths and provide a high degree of both local expertise and global understanding and trust from corporate leaders.

The broad notion of a hybrid leadership team still leaves two important questions unanswered. What type of person is best suited for a top job, like a regional manager? And what guiding principles should govern the staffing of other key positions on the top team?

The choice of a foreigner or a local resident for the role of regional manager will largely depend on the types of factors that create a competitive advantage in a particular industry. In some industries, competitive advantage depends primarily on global factors operating in individual countries.

Other senior management positions should also be driven by the relative importance of global and local factors to success in certain positions. It is imperative that the composition of the local leadership team be based on logic, not on chance or expediency. Remember that it is the local people who help transform global strengths into local market success.

Cross-border team management

People are a product of their culture, the implicitly shared norms, values and assumptions of our society. Cultural differences can often be a source of unnecessary misunderstanding, distrust, and even hostility. Thus, people working in a global company must learn to avoid the pitfalls they are almost certain to encounter when interacting with people from other cultures. What can you do to avoid these traps?

First, learn more about any other cultures you will be interacting with.
Second, understand real, not imaginary differences between cultures. Remember simple generalizations, like only Russians or all East Asians do this?
Third, make sure you focus on individuals and not on cultural stereotypes. Never forget that you will be interacting with certain people, and any one of them may be an exception within the larger culture. People usually feel offended if you treat them as representatives of cultural stereotypes.
Fourth, accept cultural differences without judgment. Judgmental behavior creates obstacles to the development of empathy and mutual respect. In addition, since it is almost impossible to disguise a judgmental attitude, it can cause resentment.
Fifth, invite people from a different culture to teach you. People love to talk about their culture. They also don't expect you to be familiar with their culture.

Global business teams play one of the most important roles in the work of multinational companies. Effectively leading global teams can be especially challenging. This is because team members often don't know each other well and are separated by physical distance, time zones, language, and culture. These factors greatly increase the risk of misunderstanding, misunderstanding and mistrust.

How to solve these problems with remote management, you can read in our article “Managing a remote team. Problems and Solutions" . And here we briefly list the main actions on the part of the team leader:

Hold one or more video meetings once a month;
While most discussions can take place via email, audio or video conferences, continue to have occasional face-to-face meetings to strengthen social bonds.
Make sure you have zero tolerance for cultural discrimination.
Make sure all team members are involved in the process.
Since you will most likely be communicating in English, ask all team members to speak a little more slowly, a little more clearly, and avoid words that do not have a universal meaning.
Watch for fault lines. This happens when two or more sub-teams become overly committed to their own points of view and cause a rift in the global team.

Keep in mind that many factors can affect global business teams, including the distances that separate team members. These recommendations can go a long way towards achieving a positive outcome for your team.

Finding and nurturing talent from around the world

Companies compete with each other not only for the client, but also for the best specialist. In overseas markets, the battle for top talent is usually even more intense than the battle for clients. This is why progressive global companies place as much emphasis on developing their brand as an employer as they do on building a strong brand image among target customers. Companies can use three strategies to do this. Each strategy plays a role and they complement each other.

The first strategy is to build respect for your company. This is different from fostering love for your products or services. This respect depends on a number of factors. To begin with, your company is considered a leader in its industry in terms of size and pace of innovation.

Further, is your company considered a socially responsible organization that contributes positively to economic development, job creation, environmental sustainability, etc.? Also, is your company culture considered healthy or toxic? And does your company allow employees to move up?

The second strategy is to increase your company's visibility in the local media. In large markets such as China and India, it is important that the CEO visit several times a year and give interviews to the local media. But even if the CEO cannot come, he can always be reached remotely.

The third strategy is to launch sophisticated marketing campaigns in the local labor market. Companies like Accenture do this regularly. They segment the job market by the type of talent they need, as well as the cities, colleges, and universities where they are most likely to find that talent. They then apply different media strategies for different segments.

Remember that success in any foreign market depends not only on how good the company's products and services are, but also on how your team promotes your brand in the local labor market. But hiring talented professionals may not be enough for you. If people are not psychologically engaged, their productivity will be only a small part of what you expect from them. At best, they will do what is required. They will not go beyond these requirements to offer improvements and innovations.

To achieve a high level of involvement, it is necessary to build both hard and soft ties between a person and an organization. Hard ties refer to monetary compensation such as salary, bonuses, company shares, and more. Soft ties see the company as a place to build a career, as well as an intellectual and emotional connection between a person and a company.

It has always been obvious that salaries and bonuses must be competitive in the local market. Looking at soft ties, you can see that most professionals place more value on long-term career prospects than short-term rewards.

If a company can convincingly demonstrate that anyone anywhere in the world can rise as high as their talents will allow, it can greatly increase the likelihood that the best talent will stay with the company for the long haul.

Smart connections are another type of soft connection between a person and an organization. Do employees understand the company's global vision and strategy? Do people think they are gaining valuable skills, or do they view their current tasks as just a job to earn a living? Are they proud to work for the company?

Emotional ties refer to how employees perceive the company's concern for their best interests. Factors that can contribute to the development of emotional bonds include whether the company is an interesting place to work, whether the company is sensitive to local holidays, whether the company creates a sense of community within the local division, and so on.

Intellectual and emotional connections do not lessen the need to keep your compensation structure competitive with local market conditions. But these connections certainly have a huge impact on how long people decide to stay, how productive they are, and how eager they are to attract new talent to the company.

Leading a global organization

Every international company needs to simultaneously achieve two disparate goals. First, you need to understand the huge variety of markets and respond to them. Second, manage the company as a cohesive organization. Diversity over cohesion will lead to a fragmented company that will not be able to take advantage of global scale and scope.

On the other hand, great cohesion, but not diversity, will prevent a company from achieving local success in any of the markets. The way out of this dilemma is to be able to create a single company culture by wisely choosing those key features in which the company's identity should be extended to different countries. These commonalities help employees from different countries to see what they have in common, as well as what makes the company unique.

Consider how leaders in an organization can help build a single company culture:

First, you need to distinguish between core and context. The core refers to those elements of a company's business, its strategy, trademarks, logos, systems and processes, codes of conduct, and culture that are central to competitive advantage in multiple markets. Context refers to all other elements that remain subject to local adaptation.
Second, don't think that core functions should only come from the country where the headquarters is based.
Third, create an easy-to-use common international information platform for your company.
Fourth, globalize career paths.

Conclusion

To become and remain a global leader, every company must excel at two very different but complementary challenges. First, you need to adapt your strategy and operations to the unique realities of each market. Second, to act as a cohesive and integrated global enterprise.

Now that you've learned how you and your colleagues can help your company develop the capabilities it needs to accomplish these two goals, you might be wondering what's next. One of the most practical and important things you can do is pick two countries other than your home country and commit to learning more about them. Select countries that are or will be important to you and the company. Study them, visit them and discuss them with your colleagues. Learn about their history, economy, culture and politics. This will be your initial strategy for turning your company into a global corporation.

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