Multinational Companies Will Need Trans-National Managers

The globalization fad that is rapidly spreading among U.S. corporations has important implications for the skills required of future managers.

Long gone are the days when companies sent a small force of expatriates to the far-flung posts of the corporate empire. These “foreign service” executives, bribed to serve most of their careers overseas by large bonuses and perks, were seldom integrated into the company’s main business at home and often were forgotten.

Next came the multinational structures that consisted essentially of cloning domestic business activities in other countries. Cost pressures and the need to be “politically sensitive” argued for replacing expatriate managers with local nationals.

Today, we see more and more companies giving up regional or geographic structures and shifting decision-making authority to “global” product divisions. For example:

* Ford is merging its North American and European operations (Latin America and Asia will follow soon) into five worldwide program centers responsible for all future product development efforts.

* IBM’s new structure moves away from its old geographic organization by setting up 14 worldwide sales and marketing groups focused on specific industrial sectors--a move that recognizes the importance of being more responsive to groups of customers with similar needs, whatever their location.

* Similar stories can be told about European and Japanese multinationals. Faced with the need to coordinate an increasingly complex set of activities, companies as different as Philips, ABB, Honda and Mitsubishi Electric either have broken operations into small units with global responsibilities or set up new coordinating mechanisms requiring multicultural, multinational task forces.

Different industries and company cultures require tailored approaches to the eternal dilemma of how best to balance global demands with local requirements. But one thing is common to all of these organizations: Cross-national teams are thrust together at all levels. They must sort out how best to serve a multinational client operating in five continents, make decisions as to when and where to add or remove capacity, design new products for global customers, transfer best practice from around the world and so on.

What sort of managerial skills does life in these global organizations require?

No one denies that technical and professional competence will continue to be requisite skills to succeed in today’s competitive business world. But they are no longer enough. The managers best suited to function in the new global economy at Apple or 3M--or for that matter at Compaq or Disney--also will need a better understanding of the global business environment, a great deal of cultural sensitivity and a set of language and communication skills adapted to operating in such cross-cultural teams.

Colleges and universities must do their part in emphasizing international content in their programs and in requiring such activities as foreign internships and language training. But the critical burden is on the corporation to provide opportunities for international careers that will enhance the acquisition of these skills by their executives.

A telling trend is the increasing reliance on foreign-born CEOs by such leading U.S. corporations as Coke, 3M, Salomon Bros., Citibank, Ford, Apple, Intel and Compaq. To the extent that the way to the top calls for an international background or experience--and that systems are put in place to provide it to young executives--there will be little need to bribe them to go abroad. Self interest will prevail.

There is no substitute for such firsthand exposure to the complexities of world markets. Having served in the trenches, the executive returns with a greater understanding of conditions overseas and more realistic expectations. The same applies to the benefits of rotating key potential managers from abroad through domestic operations.

In 1989, Coca Cola proudly assigned one of its toughest and most successful U.S. managers to France to deal with its newly acquired distribution system. He spoke no French, had never visited France and took pride in the fact that he would “Americanize” the French market. Eighteen months later, he was reassigned home. It was not that his ideas were wrong or badly implemented, but that his lack of cultural awareness got in the way of his effectiveness.

Contrast that story with Squibb’s decision to hire the head of the Chinese language department at Cornell University to head its new subsidiary in Shanghai. Although ignorant of the technical aspects of the business, he was supported by an excellent U.S. staff, and his language and cultural skills allowed him to surround himself with the best local managers, whether they spoke English or not.

The global organization of tomorrow will need a strong group of senior executives who can operate in a complex and multicultural world. This calls for a new generation of trans patriates--not ex patriates--who have served in various countries early in their careers, acquired experience in multicultural teams and have an open and curious attitude toward other peoples and cultures. The time to begin developing these skills is now.