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1999 Global Outlook Optimas Award Profile Molex Inc.

March 1, 1999
Related Topics: Managing International Operations, Expatriate Management, Global Outlook, Featured Article
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The cover of Molex Inc.’s 1998 annual report boasts: "Everywhere, Anywhere." It’s a declaration that speaks volumes about what this 60-year-old manufacturer is all about. It’s a company that’s truly global—having taken to heart the idea that no matter where the customers are based, Molex can serve them. Although based in Lisle, Illinois (a suburb of Chicago), the $1.6 billion firm operates 49 manufacturing facilities in 21 countries and employs 13,000 people worldwide. However, only 4,500 of them are located in Molex’s U.S. divisions. The rest are local nationals.

Molex makes more than 100,000 kinds of electronic, electrical and fiber-optic connectors and switches used in the electrical systems of cars, computers, household appliances, medical equipment, office electronics and other products. Its products are delivered to customers in more than 50 countries around the world. Despite the fact that the company produces technology that helps enable people to interact from anywhere, Molex has developed a culture that places high importance on human interaction and communications.

Molex adopted a global mindset early on.
Molex has a truly global outlook. The company established an international division in 1967, opening its first plant in Japan in 1970 and a plant in Ireland in 1971. Today, nearly 70 percent of Molex’s sales come from outside the United States and 46 percent of its sales are to Asia. In 1998, its sales by region were 40.1 percent in the Americas, 21.8 percent in Europe, 20.2 percent in the Far East North and 17.9 percent in the Far East South. "This broad flexibility, combined with a strong balance sheet, enabled us to continue to invest aggressively in tooling new products, improving our equipment and serving our customers—even in countries experiencing major economic problems, such as Korea, Malaysia and Thailand," wrote Frederick A. Krehbiel, Molex’s chairman of the board and CEO, and John H. Krehbiel, Jr., president and COO, in the firm’s 1998 annual report.

Because it’s global, the firm’s senior management team can shift operational emphasis from one area of the world to another when economic downturns happen, while investing in the future. For example, even though 1998 was a bad year in the Asian region, Molex still invested in its operations there by refurbishing the cafeteria in Malaysia and installing air conditioning in the warehouses. It continued to expand and invest in factories and equipment in Asia for new products.

"Our philosophy of boosting investments and sharpening our edge during rough times has greatly contributed to our moving from the 10th largest connector company in 1980 to the second largest today," the Krehbiels wrote in the annual report. During the 1990s, Molex more than doubled its global manufacturing capacity. It recently opened factories in China and Puerto Rico.

Last year, despite having experienced many challenges, the company achieved record sales and profits, growing 5.4 percent during the period. Company managers consider this respectable performance since two of the company’s four regions were affected by very difficult economic conditions and the PC industry, the largest end-market they serve, experienced weakness.

People-focused goals elevate HR.
The company’s four corporate goals, which have been in place for many years, are to provide good customer service, to fully develop its human resources, to build a truly global company and to meet or exceed financial goals. "The way I’ve always looked at Molex is, there’s only four corporate goals and two of them have to do with people," explains Malou Roth, vice president of human resources for corporate training and development who has been with the company for 15 years helping develop the firm’s global HR commitment. Every employee has an HR-related element tied to his or her performance goals.

The company goals have been translated into the languages of all employees worldwide and put on posters. "Rating goals and having posters and putting them up all over the world is all fine and good, but if you don’t help people execute them or interpret them, then all they are is posters," says Roth. Molex tries to make the goals come alive for its workforce, and its human resources team has a big hand in making that happen.

Notice we didn’t say global HR team. Molex was one of the first U.S.-based firms to do away with the concept of a domestic and international title for HR staff. The assumption was: What’s domestic if you’re a global organization? This is the kind of attitude that pervades the business.

As the primary global HR coordinator, Roth declares her philosophy that when you’re running an international company, you really can’t—or shouldn’t—expect to have the same HR policies and programs all over the world. HR actually is the most localized of all the functions. "If you’re looking at engineering, quality, manufacturing, finance, legal or other functions, HR is the one that’s the most country-specific," says Roth. "Everybody usually thinks it’s the opposite.

"What I tried to do when I came to Molex 15 years ago was take the basic HR programs and practices that I knew were good ones and make those things standards or consistent practices at every entity in every country," says Roth. Molex calls each of its business units an "entity." Each operation worldwide is a separate company. "But of course, they’re all little baby companies of Mother Molex," says Roth. "There were certain things everybody had to do to be part of the Molex family."

For example, as Molex grew rapidly during the ’80s, Roth made sure every new unit did the same things: have an employee manual with policies and practices in writing, new employee orientation, salary administration with a consistent grading system, written job descriptions, written promotion and grievance procedures, performance appraisals—all the basic HR stuff. "Now, that may sound really boring, but it isn’t when you’re starting up a company or taking over a company and it doesn’t have that sort of thing," says Roth. She found that a lot of companies in other countries never had such materials available to them. All the materials were translated into the languages of the countries in which Molex had operations. Managers were free to question anything or suggest changes to materials. However, few did. Most were happy to have human resources guidelines and they worked well from the beginning.

Other entities can add to the programs and be creative with them, but they have to implement minimum HR standards. Roth says, "It’s really a matter of: Are the basics in place and are they working?" Kathi Regas, corporate VP of HR for Molex, adds: "Our global HR Practices in training and communications helps us build on the strong foundation we have—a common way of managing our employees, strengthening their skills, and improving service to our customers both locally and globally."

Yet each local unit has unique needs, so the philosophy for hiring HR staff internationally has been to hire experienced HR professionals from other companies in the same country in which they have operations. Roth figures you need to hire people who know the language, have credibility, know the law and know how to recruit. "You can’t transfer someone in to do that," says Roth. "You can transfer a controller or a quality guy in from someplace else because those operations are much more standardized—but HR isn’t." There are 80 HR staff members in 17 countries where Molex operates.

Having guidelines and policies in place is also important because when you hire HR managers from other companies, like Intel or IBM, you run the risk of having them want to implement the same types of policies from their former firms. While you can get good ideas from new blood, you have to protect the investment you’ve made in forming a culture and your company’s way of doing things.

Sending employees to work elsewhere.
Part of the Molex philosophy about being global is to have many people moving around the company’s operations worldwide to learn from each other. For example, last year, the company continued with the rollout of the Molex Global Information System (GIS), a system that will connect all company operations around the world through a single communications link. When fully implemented, the GIS will give the firm a tool for integrating technology, manufacturing, marketing and administrative systems across all regions. It also will be year 2000 compliant and euro capable. The team that has been implementing the system has comprised employees from Molex locations worldwide. "In this case, having people from everywhere working on the system has made the expense of the project go way up, but it’s been incredibly beneficial for the overall project because it has really been a worldwide effort," says Roth.

Molex has five categories of "expats"—people who work outside their home country:

  1. Regular expats live in a country other than their home for three- to five-year assignments. There are approximately 50 of these expats on assignment at any given time.
  2. Inpats are workers who come to work at the company’s Lisle headquarters from another country.
  3. Third country nationals (TCNs) are people who go from one Molex entity to another—for example, someone who goes from Singapore to Taiwan.
  4. Short-termers are people who go to a Molex entity in another country for a short time, such as for six to nine months.
  5. Medium-termers undertake a project somewhere other than their home office that may take 12 to 24 months.

For a medium-size company, having so much worldwide employee movement is unusual—and costly. If you consider that an employee making a $75,000 salary costs about a quarter of a million dollars in total costs as an expatriate, sending 60 employees from site to site each year is an expensive undertaking. "But we feel it’s really worthwhile because there’s nothing like living and working with people outside your home country to make you understand you’re really in something bigger than Molex Japan or Molex Germany," explains Roth. Adds Regas: "Our investment in expatriates is critical to building the strong foundation we have of sharing our expertise with each other. It’s important for us to respect individual cultures while maintaining Molex’s unique global culture."

Specialized communications are vital for a global workforce.
As one way to maintain the culture, every Molex entity worldwide has to conduct bimonthly communications meetings. They’re top-down communications blitzes that bring people up to speed on what’s going on in that particular Molex unit. Usually the HR manager kicks off the meeting, and then the general manager or sales manager speaks. They’ve often had Molex clients and customers come in and speak about why quality is important to them. Engineers will come in to explain new products.

Meetings always begin with sales figures and new customer prospects, and between meetings, sales figures are posted for all to see. These meetings take no more than an hour per group. But for larger Molex entities, such as the one in Singapore, employees attend the meetings in groups of approximately 100 at a time, so the meetings can take more than a day and a half to complete.

Molex also does annual communication meetings, which include the company’s chairman, the COO, the executive vice president, the corporate VP of HR and the VP of HR, in addition to other senior executives of the local entity and the region. They spend a day at each location touring the factory, looking at new equipment and facilities and meeting with employees. "Our annual communications meetings ensure that our employees know they’re a part of something much bigger than their local entities," says Regas. "They know our history, our performance, and our plans for the future. This, combined with frequent contact among our employees from entities around the world and common practices, helps maintain our culture and strengthen a global team of employees."

Molex may be on to something. Wrote Dennis R. Briscoe in his book, International Human Resource Management (Prentice Hall, 1995): "In the end, this merger of the cultural aspects of international businesses boils down to finding ways for individuals with varying backgrounds and perspectives to work together; that is, finding ways to develop a corporate ‘glue’ that will hold the organization effectively together."

The tough part is figuring out how to do that in such a way that maximizes the energy of individuals throughout a company’s global operations, while limiting the financial barriers that inevitably result from transporting individuals from one place to another. Molex seems to have figured out a workable formula for maximizing its return on the global workforce investment and spreading the talent. As the back of the company’s 1998 annual report states: "Molex: Bringing People & Technology Together, Worldwide." The slogan has dual meaning for both customers and employees. It certainly isn’t a bad goal to strive for.

Workforce, March 1999, Vol. 78, No. 3, pp. 42-46.

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