Staff Selection Impacts Global Success
As companies go global, HR professionals are facing increased complexities in their role to identify and develop talent. Although their strategies vary, successful global companies link staffing decisions with business goals.
As director of marketing for Colgate-Palmolive Co. in Brazil, the New York native moves fluidly from English to Spanish to Portuguese, and speaks a little French to boot. She's lived in Madrid and D.C., and her stints for the company include Mexico, Uruguay and Atlanta. International in perspective, she doesn't think twice about sending her managers globe-trotting—as long as there's a compelling business reason to do so. Indeed, she's dispatched them countless times: to the Philippines to learn how Colgate markets cosmetics in that country; to Singapore to participate in a seminar on dishwashing detergents; and to Malaysia to fact-find about bar soap.
Robles epitomizes Colgate-Palmolive's international cadre of workers—the people behind the company's $7 billion in sales, of which almost 70% come from overseas. And Colgate epitomizes a company that knows how to spot and encourage global talent when it sees it. "From the beginning, everything pointed to a perfect match," says Robles of her own employment. "I was interested in the global environment from a personal standpoint, and wanted the business challenges that a multinational corporation could offer. [The company] saw in me a professional who would not only work towards the objectives of the company, but would also grow personally and contribute to the country I lived in."
Companies need to find that "perfect match" to staff the global marketplace, whether they're in the business of selling soap and shampoo or promoting pharmaceuticals and petroleum. "There's no doubt that a global work force is becoming a reality in individual careers as well as individual corporations," says William B. Johnston, author of the Hudson Institute's Workforce 2000 and Harvard Business Review's Global Work Force 2000. "Over time, that share of the work force is going to go up substantially. It will be possible to speak of a 'world middle-class work force'—a great proportion of which will speak English and one other language."
What's more, the world's work force will be increasingly mobile in the 1990s. Workers will be recruited and moved with less regard to national boundaries and country of origin. Eventually, human capital will cross national borders as easily as computer chips and cars do. However, unlike computers and cars that need only minimal adjustments to succeed in a foreign environment, people require great care—and each one is different.
Not only must HR consider the needs of its company's people as they cross international boarders, it also must ensure that the people meet its company's needs. As the global marketplace expands and the demand for qualified people grows, HR will have a direct effect on the bottom line. It's far more than a simple staffing issue. HR must identify and develop global talent to meet business goals.
Decisions must be made. Decisions complicated by the size and scope of the business. For example, how do companies decide to staff overseas operations? When is it most effective to rely on expatriates vs. local nationals? Who's best to send abroad? What personal and professional qualities lead to success? What about the host country employees? Finally, how do corporations develop a team of global managers?
Business needs dictate staffing solutions.
"In an ideal world, you don't want to send a lot of expatriates," says Gary Vose, manager of international HR for the Allen Bradley Co., a $2 billion subsidiary of Rockwell International located in Milwaukee. "It's costly (at least $200,000 a year), there are cross-cultural issues and there are frequently family complications. From a strategic-staffing standpoint, it's better to pick and choose where a few expatriates would need to go. You'd want to develop the local nationals to be able to run the business in their country."
Vose echoes the thoughts of many international HR experts. In general, most companies prefer to develop talent in the host country. It eliminates relocation costs, and local nationals usually understand the domestic marketplace better than an outsider.
There are times when Americans or third country nationals are the best staffing solution, however. For example, Colgate-Palmolive uses expatriates to shorten the delivery time of products-to-market. And AT&T sends Americans on long-term assignments to impart its home-grown corporate culture.
Some multinationals develop a team of managers who can be equally effective anywhere in the world for any amount of time, for such tasks as setting up new operations, troubleshooting or filling in when off-shore locations need their expertise. Other firms send U.S. nationals abroad for brief periods, and only until they can hire and train locals to replace them. Chevron Corp., for example, starts with as few American expatriates as possible and quickly turns the operation over to host-country employees.
Whatever the approach, successful global companies must have global strategic HR plans. Says Dale Smith, an independent HR consultant who helps organizations develop global human resources strategies, "For truly global companies, the whole issue of expatriates—particularly selection, development and repatriation—simply should be an extension of your management development program. It should be built into it, integrated, and not a separate issue."
Link global business goals to HR staffing strategies.
Colgate-Palmolive has been operating internationally for more than 50 years. Its products, such as Colgate toothpaste, Palmolive soap, Fab detergent and Ajax cleanser, are household names in more than 170 countries.
Fully 60% of the company's expatriates are from places other than the U.S. And, since 1960, two of its last four CEOs weren't U.S. nationals. In addition, all of the top executives speak at least two languages, and important meetings routinely take place all over the globe.
The company offers an array of overseas assignments to employees: long-term, short-term, and stop-gap for competency needs. Because of its reputation, it attracts people who want to become globalites—those who want global skills so that they can have international careers anywhere in the world. Colgate makes possible a diverse and fluid environment in which people frequently move in and out of U.S. headquarters.
Colgate understands global complexities, having been in that arena for decades. It doesn't underestimate the importance of HR and staffing needs for bottom-line results. However, it wasn't until recently that the company designed a global HR strategy that directly affects staffing.
In 1989, CEO and chairman Reuben Mark expressed the company's global vision. Part of this vision is to speed products to market by inextricably tying the human aspects and the business aspects together. Mark knew that the company's profitability rests on its capacity to successfully link a strategic business plan with a global HR strategy.
At the time of Mark's visionary statement, there was a gap between the business goals and the global HR activities. So, in 1991, a global team of 25 Colgate HR leaders and senior line managers began a year-long quest to develop HR policies that would synchronize with business goals. With Mark's vision in mind, the group met in teams to develop global criteria for selection, succession planning, coaching and performance management.
The team's efforts culminated in February 1992 at Colgate's Global Human Resources conference. At least 200 HR leaders from more than 35 countries attended. The message delivered to them by the chairman, president, COO, and every division president was this: Management and HR must work together for the business to meet its objectives.
Says Brian Smith, director of global staffing and HR strategy: "This global business strategy requires [identifying] a certain type of manager who understands not only the particular niches and communities in which we operate locally, but who also has that global perspective and understands the tremendous benefits of a global product line. It allows managers to move quicker and be more competitive internationally, while it demands that they wear a global hat and take the global perspective. They have to balance the global product needs with local markets."
Here's an example of why this strategy is necessary. The company used to roll out one product a year. Because of the push to speed up the launch of new products throughout the world, however, that number is up to five today, and there are plans to double that number soon. Delivering these products to the hands and homes of consumers requires staff. HR must provide Colgate with global managers who understand corporate—as well as local—culture so that they can hit the ground running as new merchandise becomes available.
"Global competencies are the centerpiece of the HR strategy," says Smith. "They're grounded in business needs. Armed with competencies that are tiered through the organization, we can target our efforts and be much more effective in bringing the best talent to Colgate."
These competencies have first a technical/functional focus, then a managerial/ planning focus, and then a leadership/ strategic focus. They're in place for marketing, finance, manufacturing and sales.
For instance, an entry-level marketing employee will focus on acquiring the necessary skills to be proficient in the functional/technical area. That will include creative excellence, consumer insight and working with technological resources. The person will advance to the management phase where presentation skills, planning and execution are driving forces. This is where communication becomes critical. It involves the global view with local execution. Finally, the individual may move into the leadership stage where the focus is on strategy, vision, teamwork and long-term planning. This is where conceptual creativity and the ability to form and manage routines and global teams become important.
To support worldwide personnel, Mark developed a resource—what Colgate calls a bundle book—for each product. The bundle book describes the complex production process of each product—coordinating raw materials, product formulation, manufacturing, packaging specifications, distribution and key marketing benefits. In other words, everything that managers need to know about any Colgate item is spelled out. Bundle books streamline the process, giving Colgate the capability to roll out many more products in any year. In fact, about 30% of the current product portfolio didn't even exist five years ago.
Colgate's Global Marketing Program is another example of the company's commitment to recruiting and staffing globally. The program takes approximately 15 high-potential recent MBA graduates and rotates them through various departments for 18 to 24 months. Recruits learn about the sales process, experience the global-business development group and get exposed to manufacturing and technology. After their stint at company headquarters, they're deployed overseas. "The whole objective of the program is to generate that international cadre of management to run the business," says Smith, who manages the program. "These are the future leaders of the company."
The Global Marketing Program is a powerful recruiting tool. More than 15,000 people stand in line for the slots every year. Typically, participants have a master's degree, speak at least one foreign language and, either through past experiences or personal travels, demonstrate an interest in living abroad.
As Colgate moves these people up the global ladder, it looks for individuals who have developed functional competencies, who have developed sensitivity to diverse cultures, and who understand their own expectations of living abroad. The fact that Colgate rotates the individuals early in their careers helps people figure out early-on if they can handle this kind of duty. If they can, it isn't unheard of for someone in this program to move functionally from finance to marketing to human resources, and move from the Ivory Coast to Panama to Thailand before returning to New York headquarters some dozen years later.
About half the company's marketing recruitment is through this program. Moreover, it isn't only a tool for recruiting U.S. nationals. It attracts people from around the world.
Building on the success of the Global Marketing Program, the company has replicated it for finance and human resources personnel. In addition to recent grads, high-potential people early in their careers are encouraged to participate. It gives them exposure and perspective.
Business goals determine needs for expatriates.
The staffing strategy of Colgate is clear. "We only send expatriates if we perceive a gap in competency [at the foreign business unit], if a real business need exists, or if specific professional or technical training needs exist," says Smith. "We'd also send a high-potential person who needs the exposure as a development opportunity."
AT&T, on the other hand, has found that using mainly U.S. expatriates fits best with its business plan. Unlike Colgate, AT&T is a new worldwide player. Nevertheless, the company appreciates the urgency of a global vision for its staffing.
It has to. The corporation has experienced exponential growth in overseas markets. At the end of 1986, the U.S. giant had 50 people in 10 countries and only about 1% of its revenue from outside the U.S. At the end of 1992, in large part because of its alliance with NCR, the company had 52,000 overseas employees in 105 countries. Approximately 26% of its revenues currently come from abroad; even without NCR, it would be approximately 19%.
"We've been scrambling around trying to get the basics of how to hire people, compensate them, get them in place. It's a geometric growth pattern," says Richard Bahner, international HR director.
Consequently, AT&T has turned very entrepreneurial in its approach to staffing abroad. "Although expatriates initially seem to be expensive, they may be the most cost-effective way to accelerate globalization," says Bahner. "You very quickly get over the hump of the assimilation into the AT&T way to do business," because expatriates can best transfer the corporate culture to local people, who later can convey it to other local people. This communication is important because corporate culture embodies the way in which the company does business. It's the way companies act in the marketplace and the way they treat employees.
"If you have every confidence that the local person in Beijing is going to think about a business deal the same way you do—and the same way as the person in Paris and Jakarta—then you have every confidence to give the power and capital to that person to make the decision closest to the customer," says Bahner. "However, if you don't have the assurance that business will be handled in a similar way, you'll be reluctant. You'll want to put in place all sorts of processes to control what happens." In that scenario, a company can't react fast enough to the marketplace, and speed is critical in the competitive market.
AT&T has three different types of assignments. Long-term placement occurs when the company is entering a market and setting up a business. Expatriates get into the country where the business is starting up, establish an infrastructure that can manage the business, hire and train people to work in the organization, and localize the project so that host-country nationals can handle it.
Mid-range assignments can last as long as 24 months. This could be overseeing the building of a plant or handling an installation in a country. Short-term assignments can span to 11 months, and are for supplemental assistance to build up staff in a country or for specific training programs.
Regardless of the assignment, the selection decision usually is made by business-unit managers. Moreover, until June 1990, there were no formalized procedures for choosing people for international positions. This selection process resulted in a crushing 40% of expatriates leaving the company after assignment.
Enter the international HR department with a package called the International Career Development program. The tool helps unit managers with some basic decision support processes, such as guidelines for deciding when to use local people and when to send expatriates, and how expatriates will transfer responsibilities to locally trained individuals. The package also contains a questionnaire that asks the managers to consider the technical, managerial and leadership qualities that the position requires.
The international HR department helps small business units abroad relocate and orient expatriates; provides corporate standards; and manages legal and labor procedures. Larger units, however, often set up their own infrastructures to handle staffing and HR responsibilities.
The use of expatriates is more limited at Chevron Corp. and Texas Instruments Inc. than at AT&T. San Francisco-based Chevron typically only sends workers to a foreign locale for their technical and management skills. Its intention is for those expatriates to give the reins to local nationals as soon as possible. Although staffing policies vary for countries as different from each other as the U.K. and the Congo, typically Chevron first sends a management team to review the skills of local employees. "In a developing country, you'll frequently see a higher proportion of expatriates to local national employees," says Greg Berruto, HR adviser for Chevron Overseas Petroleum, Inc. "As the operation matures, and as the local national employees are trained, you'll see a change in the proportion."
For example, the U.K. is a fairly mature operation. Exploration in the North Sea started in the late 1960s. Today, the ratio is 10 Britons to every one U.S. national. On the other hand, when Chevron does frontier exploration in lesser developed countries, the geologists, engineers and earth scientists will likely tip the ratios the other way.
The unifying strategy for Chevron's operations within these countries is the commitment to local management. Once up-and-running, managers at operating units abroad have authority to staff and run their business as they see fit to meet the needs of the local business unit.
Dallas-based Texas Instruments Inc. has a long history of being a global business. With 62,000 employees in more than 30 countries, the company known for its semiconductor, defense electronics and information technology affords operating units a great deal of autonomy, wherever they may be located. In fact, sending people overseas usually isn't an intention when the company hires domestic employees. People are sent on assignment, but it's usually job-specific.
"Just because we're a global corporation doesn't mean we have to staff globally with U.S. citizens. Technology takes away the need for people to physically move and live abroad," says Dan McMurtrye, manager of corporate placement services. "We take people from all around the world when we're developing products. They'll be part of that team. But we don't relocate them together. We communicate through phone, fax and computers. It's much more cost-efficient and less disruptive."
For example, designers from Dallas, Tokyo and Nice work on Macintosh computers to design products. They even can work together in real time. Designers might all view the same product on their computer screens and then teleconference to talk about the design. Technologies that weren't available 10 years ago make this kind of global network possible today.
In addition to its electronic network, TI sends people on extended travel so that they can meet with cohorts around the world. Different from assignments, these trips are designed to create contacts that facilitate communication when people return to their home bases.
Empower local nationals.
Rockwell International's Allen Bradley Co. division believes that strong local nationals are key to the strategic-staffing mix. However, says international HR manager Vose, many of the organization's overseas operations don't have adequate internal HR support. They need help in determining competitive salaries, proper benefits and even recruiting.
One of the areas of focus is training. "When we hire local nationals, they're not necessarily totally up-to-speed in all of our products," says Vose. In that case, the company might bring key local nationals to the States and offer them skills training. They, in turn, transfer those skills to their colleagues when they return to their homelands. "It gives them the technical training they need. Equally important is that it introduces them to the real Allen Bradley in the U.S." This opportunity gives them a chance to develop relationships and understand the workings of the company. It's also very expensive, however.
Another alternative is to send people from headquarters to various countries to deliver technical training to larger groups. For instance, Allen Bradley may send a trainer on an Asia-Pacific tour. He or she will conduct classes in India, Taiwan and Japan. When the trainer is in Taiwan, the company will bring in employees from Hong Kong and Korea.
Allen Bradley requires the key personnel in these countries, who will be receiving the training, to know English. Not only does this help them better understand the company, but it also enables them to communicate with headquarters.
The foreign nationals running the company's operating units abroad also must be able to function independently. "You need a very strong person who knows the local market and knows how to do business in the local market," says Vose. "Many countries don't have the same support structure as we do back home."
HR must supply that support by recruiting the right people for the global job. Whether they recruit from abroad or from within the U.S., HR managers have to approach the situation thoughtfully. A strategy linked to the business plan is the effective way to recruit and hire individuals who will successfully compete in the global marketplace.
Personnel Journal, January 1994, Vol. 73, No. 1, pp. 88-101.