Managing Employees in a Global Marketplace

Growth-minded companies are grooming employees to succeed in an increasingly global marketplace.

The business world isn't going global -- it's already there. And as growth-minded companies are climbing aboard the international business bandwagon, they are grooming their future corporate leaders to successfully manage operations on a worldwide scale. In the global arena, business deals are heavily influenced by culture, and the contrasts are multifarious. Accomplishing the same task from one country to the next may be achieved with very distinctive approaches.

"We are clearly a global economy," says Daniel Orchant, partner at KPMG's International Executive Services Practice. "Companies have to look at things from a global perspective rather than from a unique set of country-specific facts and circumstances [that apply worldwide]."

Companies operating in the business world today are faced with the challenges of hiring foreign employees for their American-based organizations or sending American employees abroad to work in remote facilities, open new plants, or interface with an international clientele. This article will examine both sides of the international coin, from patriation and management issues to repatriation and retention strategies.

Being a Good Host

Recruiting in a global employee market can be both time- and capital-intensive. Many thousands of dollars go into the process of recruiting foreign workers and integrating them into the U.S. labor force. But it doesn't stop there -- U.S. companies must budget for ongoing support and cultural training for non-American workers. Experts warn, however, that a painful patriation may lead employees to seek comfort in the arms of a competitor, resulting in the loss of a major financial investment by the company that originally brought the foreign worker to the States.

Compensation and benefits issues are high priority for U.S. companies trying to provide non-American employees with a sense of security in their new environment. Seamless integration, however, is often difficult to achieve.

"In many cases, you have a compensation and benefits system in a foreign country that might not equate directly with our benefits and pay systems here in the United States," says John Fadel, senior manager with the Human Capital Advisory Services division of Deloitte & Touche. Replicating the socialized benefits of many European countries is another obstacle for U.S. firms. And, of course, there is a myriad of relocation issues that don't end with housing and immigration. Cultural issues are paramount to the successful patriation of an international employee.

U.S. companies should be prepared to provide their foreign hires with assistance in financial and legal matters, social and educational support, and insurance and tax issues as part of the patriation process. In addition, most foreign nationals will expect periodic travel privileges back to their home countries to visit relatives. Early attention to these details will make the non-American employee more comfortable and, therefore, increase the odds of productive performance.

Managing and Retaining International Employees

According to Orchant, if managers do not have a global or international background, they may find it difficult or frustrating to manage the career objectives and the performance of foreign citizens working in the United States. And much of the frustration boils down to culture. Dean Foster, managing director of Berlitz Cross-Cultural Division Worldwide, an international cultural training firm, says many non-Americans working within the United States struggle with what are uniquely American ways of doing things. For example, in the U.S. workplace, individuals are encouraged to be self-starters and achieve goals independently. But many other cultures just don't work that way.

"One of the biggest complaints we hear from non-Americans working in the United States is that they feel abandoned -- they feel they get no direction and are not trained properly," says Foster. "They feel like they are completely lost in a very impersonal structure in an environment that assumes they will do things on their own and achieve on their own."

It is critical for American managers to understand that employees from abroad cannot be left alone; rather, they must be given a great deal of direction and support. Managers should view foreign employees as the next generation of global business leaders, insists Orchant, and part of that is helping them reach the right conclusions and helping them work through a problem by assigning mentors to guide them.

To be sure, successful supervision of international employees will depend largely on the degree of management's understanding of the distinct cultural differences between an employee's home country and the United States. In Latin American cultures, for example, the workplace is often intimately involved in an employee's personal life, and Hispanic workers don't hesitate to seek their managers' advice on private matters. In contrast, the American culture dictates that employees conceal personal problems in their places of business.

"Management has to break down a lot of barriers," says Orchant. "But over a period of time, management adapts a little, and the foreign employee adapts a little, and the group becomes more cohesive, as a result."

Preparing Your Own Expatriate

Up until now, we've been focusing on foreign employees working within the States. The challenges of sending an American employee abroad, however, are much the same -- but in reverse. The first step is deciding which employees to send on foreign assignments.

What characteristics should employers look for when choosing their American delegates? There are a few obvious traits common to individuals who are capable of succeeding in foreign markets, but the profile of a foreign assignee (or expatriate) today is not the same as it was 10 years ago, says Fadel. For instance, more single females, as opposed to married males, are enlisting as cross-border employees in today's diverse U.S. workforce.

Technical qualifications are vital in choosing the right candidates, but companies have to look beyond that when making a decision, says Fadel. "You want people who can show a certain level of flexibility and tolerance in a new environment. You want people who are comfortable with different cultures -- people who have shown, on some level, that they have a desire to take on an international assignment." Other terms used to describe successful U.S. expatriates include cultural awareness, curiosity and adaptability.

Orchant suggests cross-cultural training and language lessons to help get global candidates into the expatriation mindset. The departure process should take several months and allow sufficient time for the employee to wrap up personal business, such as selling a home or car, obtaining a work visa, and so on.

Compensation and benefits packages can be tricky, due to issues like cost of living variances and currency fluctuations found throughout the world. In Latin American countries, for example, a currency devaluation can quickly halve an American expatriate's salary.

"Along with currency fluctuation, you must take into account inflation," notes Arthur Kroll, author of "CCH Compensating Executives" and CEO of KST Consulting, a compensation and benefits-consulting firm based in New York City. "While the U.S. inflation rates are between 2 and 3 percent, inflation in Russia is reported to be as high as 64 percent." Kroll says expats often negotiate foreign adjustment premiums or hardship allowances before accepting assignments in less glamorous regions, like former Soviet block countries, for example.

Tax equalization is another important factor for American expatriates. The United States is perhaps the only country in the world that taxes its citizens on a global basis; therefore, the expatriate is often levied in the both the United States and the foreign country.

But financial issues aside, experts say more companies are starting to pay attention to the family aspects of expatriation rather than focusing solely on the employee. "If the spouse and children have a good expatriation, the individual employee has a much more successful expatriation and is much more successful in their assignment because they are able to quickly focus on their job instead of trying to get the family on stable footing," explains Orchant.

Experts also stress the importance of succession planning prior to sending employees abroad. Expats should understand what skills they will need to do the overseas work, what skills and experience they will bring back, and what they need to do during their assignment to ensure a successful reintegration at the end of their international task.

Managing U.S. Employees Abroad

Once the expat is settled in the foreign location, a whole new collection of challenges begins to surface. To avoid as many potential pitfalls as possible, a mentoring program should be immediately established for the expatriate, both in the foreign country and at home. While a foreign mentor will help the expatriate adjust to his or her new assignment, Orchant says a U.S. mentor must keep the employee informed of goings on at the home company. The U.S. mentor should also be involved in the assessment of the individual, even while he or she is on foreign assignment, to ensure continual discussion about the employee's progress and future with the company.

But mentoring alone is not enough to prevent culture shock altogether. "Sixty percent of international joint ventures fail, not because the individuals involved don't have the technical skills or because companies don't put the resources and money into them," says Foster. "They fail because the two partners from these different cultures misunderstand each other, they can't align their goals, they don't have the same sense of how to do business on a day-to-day basis, and eventually it all crashes in."

One common mistake made by American expatriates is trying to impose American ways of doing business on their foreign counterparts. Foster says when Americans go into international assignments with their uniquely American ways of working, they are often misunderstood and feel frustrated about why their foreign colleagues won't do things "the right way." Experts say up front and ongoing training will diminish this risk significantly.

Another hurdle for American companies managing employees on a global scale is fostering communication. When employees work abroad, the result is often "out of site, out of mind." Mikell Rigg McGuire, president of international business for Franklin Covey, a leading global provider of leadership development and productivity services, says if management fails to cultivate some level of interdependence among its global cadre of employees, the company risks building duplicate infrastructures and wasting opportunities to learn from its own mistakes.

Fadel says it's important to get an understanding of how your employees perceive the international human resource policy you've put in place and why you've relocated them. "You need to make sure they feel good about the programs that are underway to facilitate their international assignment," he explains. "You want to know you are meeting their needs." Indeed: A smooth transition and consistent communication usually results in a successful assignment from both the employee's and company's perspective.

Repatriating and Retaining U.S. Expats

"Most expats will tell you the experience accelerated their wisdom in business by five to 10 years," says McGuire. Unfortunately, she continues, most companies don't recognize these new skills during the repatriation process and fail to give the employee an assignment that utilizes his or her newfound global experience. According to research, this problem is one impetus for the nearly 40 percent of repatriates that leave their domestic jobs within two years of returning to the States. With an average price tag of $1 million for a three-year foreign assignment, companies must focus on retaining their repats and allowing their education in international business to pay off for all involved. Experts say it is absolutely critical that the repatriate believes the foreign assignment has furthered his or her career.

"Getting back to the workplace can be as challenging -- if not more challenging -- as getting out into another workplace was when you first expatriated," says Foster.

Orchant says companies must offer repatriation training instead of just assuming people will automatically resume their normal American business lives -- and that includes counseling, mentoring and career-planning programs for the returning employee.

"Employees who have been overseas for several years need transitional support when they come back into the American society, which is much more of a middle-class approach," says Keith Stock, global director of the Financial Services sector for Ernst & Young Consulting Services. For example, most expats have more disposable income when overseas, and the return home requires a change in their discretionary spending habits. "If you come back from Indonesia or Malaysia, where you had domestic help and proprietary treatment in the local jurisdiction, the egalitarian society in the U.S. can be quite a challenge," says Stock.

Establishing a Global Corporate Culture

With employees coming and going on an international level, establishing a global corporate culture is essential to the overall success of the company. It is vital that all employees view foreign entities as an integral part of the American corporation; therefore, global-minded companies must take care to communicate the organization's commitment to international growth.

"In the '90s, the notion of a global company has taken hold, where the global corporate culture and approach to treatment of human resources and practices has really superceded national boundaries," says Stock.

But Stock says many companies are still waffling on their commitment to the corporate or national cultures -- and this is a mistake. To gain respect in the global markets, management will have to make a decision on issues of diversity, practices, promotion and company-wide codes for conducting business.

"If you impose too much corporate structure in individual global markets, you can restrain your employees from being creative and developing in the method that's right for their marketplace," says McGuire. "You need to create some kind of common element that ties you cohesively together, but at the same time allows independence in individual markets."

As you venture into the realm of managing global employees, remember that Americans are representatives of a very unique way of doing things -- an American way of doing things -- and these methods may not always be well received in a diverse global marketplace. Still, experts agree the rewards are worth the risks and offer one fundamental guideline to consider when doing business in international arenas: Paradigms of success are different as you travel around the world; don't take cultural baggage into a global marketplace.

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