CONTENTS PREFACE William H. Mobley
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INTRODUCTION William H. Mobley and Peter W. Dorfman
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PART I: FOUNDATIONS OF GLOBAL LEADERSHIP INTRODUCTION Peter W. Dorfman
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STRATEGIC LEADERSHIP IN GLOBAL BUSINESS ORGANIZATIONS: BUILDING TRUST AND SOCIAL CAPITAL Michael A. Hitt, Barbara W. Keats and Emre Yucel
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ISSUE LEADERSHIP THEORY AND ITS IMPLICATIONS IN GLOBAL SETTINGS Kibok Baik
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GLOBAL TALENTSHIP: TOWARD A DECISION SCIENCE CONNECTING TALENT TO GLOBAL STRATEGIC SUCCESS John W. Boudreau, Peter M. Ramstad and Peter J. Dowling
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COMPETENCE, NOT COMPETENCIES: MAKING GLOBAL EXECUTIVE DEVELOPMENT WORK George P. Hollenbeck and Morgan W. McCall, Jr. v
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PART II: CROSS CULTURAL PERSPECTIVES INTRODUCTION Peter W. Dorfman
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INFLUENCE TACTICS ACROSS TWELVE CULTURES Jeffrey C. Kennedy, Ping-Ping Fu and Gary Yukl
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CULTURAL ADAPTABILITY AND LEADING ACROSS CULTURES Jennifer J. Deal, Jean Leslie, Maxine Dalton and Chris Ernst
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LEADERS’ SOURCES OF GUIDANCE AND THE CHALLENGE OF WORKING ACROSS CULTURES Peter B. Smith
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THE CHINESE LEADERSHIP THEORY Wenquan Ling and Liluo Fang
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CORPORATE CULTURE AND ORGANIZATIONAL EFFECTIVENESS: IS THERE A SIMILAR PATTERN AROUND THE WORLD? Daniel R. Denison, Stephanie Haaland and Paulo Goelzer
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PART III: PROCESSES, PRACTICE AND DEVELOPING GLOBAL LEADERS INTRODUCTION William H. Mobley
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STRATEGIC MANAGEMENT OF GLOBAL LEADERSHIP TALENT Elaine B. Sloan, Joy F. Hazucha and Paul T. Van Katwyk
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CREATING AND SUSTAINING BALANCE IN GLOBAL BUSINESSES: A PRACTITIONER VIEW John Hofmeister and Sarah Parker
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INFLUENCE AT A DISTANCE: LEADERSHIP IN GLOBAL VIRTUAL TEAMS Don D. Davis and Janet L. Bryant
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DEVELOPING GLOBAL MANAGERS: INTEGRATING THEORY, BEHAVIOR, DATA AND PERFORMANCE Joseph J. DiStefano and Martha L. Maznevski
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LEADERSHIP DEVELOPMENT IN ASIA: A PERSONAL VIEW Linda E. Laddin
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CONCLUSIONS William H. Mobley and Peter W. Dorfman
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ABOUT THE EDITORS
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ABOUT THE CONTRIBUTORS
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TABLE OF CONTENTS FROM VOL. 1
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TABLE OF CONTENTS FROM VOL. 2
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PREFACE Welcome to Volume 3 of Advances in Global Leadership. Our objectives in this volume remain the same as in Volumes 1 and 2 of this series (Mobley, Gessner & Arnold, 1999; Mobley & McCall, 2001). We seek to advance the definition, conceptualization, and understanding of global leadership processes and the development of multinational and global leaders. Multiple authors (see e.g. Kets deVries & Florent-Treacy, 2002; McCall & Hollenbeck, 2002; Tichy, 2002), including those in Volume 1 and Volume 2, have documented the accelerating globalization of business, the relative dearth of leadership talent, the inadequacy of global leadership development processes and the continued derailment of international executives. These realities require better-developed models, definitions, measures, processes and tools for understanding and developing leaders in the global economy. This deeper understanding of multinational and global leadership requires, among other things: Understanding the interplay among country and company cultures, corporate
strategy, and stage of company and business unit development, as well as individual differences among leaders, followers and stakeholders; Evaluating the generalizability of leadership and leadership development models from Western and non-Western cultures; Addressing virtual/distance leadership of multinational organizations and teams and how new technologies bear on leadership across multiple borders; Understanding multicultural and global leadership across national boundaries in non-traditional organizational structures, e.g. alliances and cross-cultural JV’s; Encouraging greater communication among executives, leadership development professionals, consultants and academics dealing with global leadership and leadership development; “Giving voice” to authors from, or working in, non-Western as well as Western cultures, and from emerging and mature markets.
This biennial series of high-quality, original papers seeks to address these and other issues. Our intent is to provide a series that will be of interest and value to: Those leading in multinational settings; Those aspiring to lead in multinational settings; Academics teaching and researching in areas related to multinational and global leadership; ix
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Those responsible for developing multinational and global leaders; Those providing consulting and other services in support of the development of global leadership and global leadership processes. Based on feedback received from Volumes 1 and 2, we are reaching these multiple audiences and we believe Volume 3 continues to follow that path. The risk of our broad and eclectic approach is that there will be something of interest for everyone, but not everything will interest everyone. Our hope is that the selection of manuscripts will stimulate, pollinate and challenge practitioners and academics, Westerners and non-Westerners, students and leaders. We encourage you to read and reflect on the chapters that are out of your current comfort zone. It is an honor and pleasure to join with Peter W. Dorfman in co-editing Volume 3. Peter is a long-time friend from our days as fellow doctoral students in I/O psychology at the University of Maryland. Peter’s long-term program to research on cross-cultural leadership issues (see e.g. Dorfman, 1996, 2003), his knowledge of the literature, his global network of scholars, and his current involvement in the GLOBE project (see e.g. House, Hanges, Ruiz-Quintanilla & Dorfman et al., 1999) all contributed to his substantial contribution to this volume. It has been a pleasure collaborating with Peter. The biographical summaries of the Volume 3 contributing authors are included in a subsequent section. Our special thanks to each of the authors for contributing their insights, time and energy to this series. Our deep appreciation also goes to Kim Canon for her editing and coordination with the authors, editors and publisher. Kim did a superb job on Volume 3 as she did with Volumes 1 and 2. Thanks also to Maureen Bayless, former Global Research Consortia (GRC) Coordinator of Member Relations and Special Projects, and now with Texas Instruments, for her communication and coordination efforts early in this project. Subsequently, Phoenix Xu, GRC Project Manager in Shanghai and Kate Fang, my research assistant at China Europe International Business School (CEIBS) in Shanghai played valuable roles in bringing this volume to closure. We particularly appreciate the support and patience of Catherine Hutchison, Tom Clark, Deborah Raven and their team from JAI/Elsevier Science. With authors from four continents teaming with Kim Canon in Texas, Phoenix Xu and Kate Fang in Shanghai, the JAI/Elsevier Science team in Oxford, Great Britain, Peter Dorfman in New Mexico and me in Hong Kong and Shanghai, we have together continued to advance our own learning about virtual teaming. Therefore, we read with particular interest Don Davis’ chapter in this volume on distance leadership and teaming. Finally, thanks to the leadership of PDI, Lowell Hellervik and Cindy Marsh and to the charter and newer corporate members of the PDI Global Research Consortia (GRC) for their support of this project – Agilent,
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Air Products, BP-AMOCO, Caltex, Coca-Cola, Dow, Eli Lilly, Hewlett-Packard, Honeywell, IBM, Mandarin Oriental Hotel Group, MCI-Worldcom, Mobil, Motorola, PDI, PPG, and Shell – all are global leaders in many ways. Planning for Volume 4 is under way. Suggestions, comments and manuscript ideas will be welcomed.
[email protected] William H. Mobley AGL Series Executive Editor
REFERENCES Dorfman, P. W. (1996). International and cross-cultural leadership research. In: B. J. Punnett & O. Shenkar (Eds), Handbook for International Management Research (pp. 267–349). Oxford, UK: Blackwell. Dorfman, P. W. (2003). International and cross-cultural leadership research. In: B. J. Punnett & O. Shenkar (Eds), Handbook for International Management Research (2nd ed.). Ann Arbor, MI: University of Michigan. House, R. J., Hanges, P. J., Ruiz-Quintanilla, S., Dorfman, P. W., Javidan, M., Dickson, M., & Gupta, V. and 170 co-authors (1999). Cultural influences on leadership and organizations: Project GLOBE. In: W. H. Mobley, M. J. Gessner & V. Arnold (Eds), Advances in Global Leadership (Vol. 1, pp. 171–233). Stamford, CT: JAI Press. Kets deVries, M. F. R. K., & Florent-Treacy (2002). Global leadership from A to Z: Creating high commitment organizations. Organizational Dynamics, 30(4), 295–309. McCall, M. W., Jr., & Hollenbeck, G. P. (2002). Developing global executives: Lessons of international experience. Boston, MA: Harvard Business School Press. Mobley, W. H., & McCall, M. W., Jr. (Eds) (2001). Advances in global leadership (Vol. 2). Oxford, UK: JAI/Elsevier Science. Mobley, W. H., Gessner, M. J., & Arnold, V. (Eds) (1999). Advances in global leadership (Vol. 1). Stamford, CN: JAI Press. Tichy, N. M. (2002). The leadership engine: How companies build leaders at every level. New York, NY: Harper Business.
INTRODUCTION Unless one keeps rowing the boat forward, the current will take you backward. You cannot stand still, only go forward or backward (An Old Chinese Proverb).
The currents of globalization continue to accelerate. As the old Chinese proverb says, you cannot stand still in the face of these currents, only go backward or forward. In the face of the multiple currents driving globalization, the accelerated movement toward market economies globally, the continued geo-political flash points and risks globally, the weakening of confidence in corporate governance globally, the continued derailment of leaders globally, all beg for deeper understanding of global leadership processes. All involved in delivering, developing and studying global leadership need to be rowing faster and smarter and with better conceptual, measurement and behavioral tools and processes. We are frequently asked for our definition of global leadership. For the purposes of this series, we define global leadership as influence across national and cultural boundaries. Several things to note about this deceptively simple definition: Influence can be exerted across national and cultural boundaries without leaving one’s home country. Global leadership is not just about expatriates, although expatriates are an important subset of inquiry. Secondly, global leadership is not just about the individual and individual knowledge, skills and behaviors (competencies). Influence can be exerted by individuals and teams as well as by corporate and societal cultures and processes. Influence can be effective, ineffective or differentially effective as a function of a number of organizational contextual variables (e.g. strategy, structure, phase of organizational development, corporate culture and processes, diversity, etc.) and geographic and other cultural contingencies. Thirdly, global leadership is not just about CEOs of global corporations, although this is a legitimate subset of the topic. Many individuals, teams and processes can exert influence, effectively or ineffectively. We believe that understanding global leadership requires examining the intersections and fit among individual, organizational and cultural contextual variables and processes; none of which are static but may be changing at different rates. The chapters selected for this volume seek to illuminate some of the intersections. We will have more to say on the definition of global leadership in our concluding chapter. xiii
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The manuscripts selected for Volume 3 are divided into three sections: I. Foundations of Global Leadership; II. Cross-Cultural Perspectives; and III. Processes, Practice and Developing Global Leaders. The assignment of the various chapters to one of the three sections is somewhat arbitrary since many of the chapters could easily fall into multiple categories. We will lead each section with an introduction to highlight, summarize and inter-relate the chapters in that section. In the last chapter of this volume, the co-editors will offer our integration, implications and suggestions for the path forward. The manuscripts selected for Volume 3 cover a diverse set of topics, perspectives and geography. In Part I, Mike Hitt, Barbara Keats and Emre Yucel provide an insightful and timely analysis of building trust and social capital via strategic leadership in global organizations. Kibok Baik, a leading leadership scholar from Korea, shares his perspectives on issue leadership and its implications for global settings. John Boudreau, Peter Ramstad and Peter Dowling present their leadingedge thinking on moving global talentship toward a decision science connecting talent to strategic business success. George Hollenbeck and Morgan McCall, major contributors to Volume 2, continue their challenge of the inflexible application of competency models and focus our attention on competence. In Part II on cross-cultural perspectives, Jeff Kennedy, Ping-Ping Fu and Gary Yukl provide an analysis of influence tactics across multiple cultures. Jennifer Deal, Jean Leslie, Maxine Dalton and Chris Ernst offer insights into cross-cultural adaptability and leading across cultures from their ongoing research program at the Center for Creative Leadership (CCL). Peter Smith provides insights into leaders’ sources of guidance in working across cultures. Wenquan Ling and Liluo Fang from the PRC share their insights into Chinese Leadership Theory and the primacy of moral leadership. Dan Denison, Stephanie Haaland and Paulo Goelzer provide an analysis of corporate culture and organizational effectiveness across cultures, continuing Denison’s programmatic research into corporate culture. In Part III, PDI leaders Elaine Sloan, Joy Hazucha and Paul Van Katwyk provide an integrative framework for the strategic management of global leadership talent. John Hofmeister and Sarah Parker from Shell share an insightful analysis of the sources and solutions to the tensions among corporate centers, regional and local interests in global organizations, a must read for all in global organizations. Don Davis and Janet Bryant provide an important analysis of influence and leadership in global virtual teams, a challenge in all global organizations. Joe DiStefano and Martha Maznevski offer insights into how leading cross-cultural professors at a leading business school are developing cross-cultural awareness for global leadership among executives and MBAs. Linda Laddin, an experienced developer and coach of leaders, shares her personal perspectives on leadership development in Asia.
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As noted in the introductory paragraphs of this section, we need better oars and rudders (models, metrics, behaviors and processes) that are well-conceptualized and designed, appropriately adaptable and trustworthy in order to better understand and develop global leadership processes and global leaders that will exert effective influence across national and cultural boundaries. Our authors have contributed a stronger set of oars and rudders to help our navigation into the global currents. We trust you will enjoy the chapters to follow as much as we have in editing them. Returning to the old Chinese proverb, let the learning and rowing continue. Enjoy the journey! William H. Mobley and Peter W. Dorfman Editors
INTRODUCTION Peter W. Dorfman It follows from our definition of global leadership as influence across national and cultural boundaries, that influence may be exerted from many sources including individuals and teams as well as the more macro entities of corporate and societal cultures. This section of Volume 3 considers various foundations of influence. Because a foundation is the ground upon which something is built (Webster, 2000), the foundations in this section speak to key elements necessary for leadership success in both domestic and global leadership arenas. The authors contend that organizational effectiveness depends on leaders establishing trust among key organizational members, defining the most critical issues facing an organization, connecting specific talent within the organization to match strategic organizational imperatives, and developing leadership competence. Of course, the complexity and difficulty of successfully achieving each of these foundations increases when we are dealing with leadership in multinational organizations, as the authors in this section make abundantly clear. We begin with a chapter by Michael A. Hitt, Barbara W. Keats and Emre Yucel, which makes a compelling case for the importance of leaders’ developing trust and social capital within organizations. Trust in corporate leadership seems to be at an all-time low, as witnessed in newspaper headlines such as “Even if Heads Roll, Mistrust Will Live On” (New York Times, Oct 6, 2002). One financial column in the same paper states, “After almost a year of ceaseless and stupefying scandal, investors know that if trust is to be restored in the financial system, radical change must come from executives, Wall Street, and the accounting industry” (Gretchen Morgenson, New York Times, Oct 6, 2002, p. 1, Section 3). Given the recent debacles of Enron, WorldCom, and ImClone, it should come as no surprise that in
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terms of trustworthiness, national polls place CEOs somewhere near the bottom, ranking with national politicians. As Hitt and colleagues point out, strategic leaders in many of the most visible failing firms have violated the “trust” placed in them by a host of constituencies. While this observation is hardly new, they continue by weaving a web of compelling arguments linking the leader’s development of trust to the ultimate economic success of the firm. Trust becomes a pivotal role in the development of social relationships within and outside the firm, which in turn forms the “social capital” needed to create value for the firm. This chapter is important because it not only affirms the common-sense notion that trust is a key leadership attribute, it also outlines how leaders can develop trust within and between organizations. Hitt and colleagues develop logical and compelling arguments as to why the principles outlined in the chapter are critical for global leaders who must develop a competitive advantage in this very complex, dynamic and difficult world of global competition. The next chapter is an ambitious undertaking by Kibok Baik in which he develops a new leadership theory labeled “issue leadership theory.” Although the theory has many facets, the heart of it involves the critical leadership role of making sense out of the environment by recognizing, or creating, issues critical to organizational success. As you might expect, considerable time in the chapter is spent defining the importance of issues in the context of leadership. For Baik, issue-creating activities involve a series of specific actions such as sense-sharing, issue-articulating and issue-implementation. In the theory, leadership is defined as a process in which a person guides the audience by creating issues, involving the audience and implementing the issue. While the theory is new, elements of the theory follow in the footsteps of other scholars who have developed the notion that one of a leader’s primary roles is interpreting the meaning of the environment for followers. The Event Management Leadership Theory by Peter Smith and Mark Peterson (1988) (see also Smith’s chapter in Part II of this volume) constitutes one example, as does the vast organizational literature concerned with leadership sense-making best articulated by Karl Weick (1979). One intriguing aspect of this issue leadership theory is Baik’s treatment of what he terms “the audience” who interacts with the leader on any given issue. The audience represents all people who are relevant to the particular issue at hand, something akin to the concept of stakeholders (for this specific leader and issue) or the set of people involved in the 360 degree feedback concept in performance or development feedback (e.g. superior, subordinate, peers, customers, etc.). Baik sets high standards for this theory as he maintains it: (a) should account for concrete organizational outcomes such as productivity, innovation and quality improvement as well as softer outcomes such as satisfaction and commitment; (b) is specific enough to tackle real organizational problems; and (c) is dynamic enough to meet the complexity and speed of today’s multinational
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organizations characterized by virtual teams and geographic dispersion. The leadership model further includes antecedents, moderators and organizational outcomes. The chapter finishes with a discussion of the application of this model to global business settings. John Boudreau, Peter Ramstad and Peter Dowling take a different tack related to strategic leadership as they spell out the need for firms to create a structure whereby global competitive advantage is achieved through the development of “pivotal talent pools.” Linking these talent pools to strategic goals and resources should be the focus of a newly energized HRM department. They see a shift in HRM functions from a movement to improve HRM practices applied to the global workforce to the decisions made about talent. As such the firm must “target organizational and human resource investments toward those talent areas that have the greatest impact on strategic advantage.” They point out the need for developing a decision science that is as well developed as models and theories in marketing and finance. The chapter develops a framework for a decision science where the logical connections between talent and strategic success are specified through several interconnected models. The beauty of this chapter is that the authors present the analytic detail necessary to solve some of the real-world questions faced by global companies. As they suggest, organizations often use global strategies and decision models that are not connected to talent. Their model, labeled the HC BRidge framework, identifies where talent pools connect to strategy. This model is integrated with a value-chain, culture and product matrix (VCCP) to suggest whether the talent pools have their effects across cultures and products, and to suggest which HR practices are most likely to increase organizational effectiveness. Several concrete examples of both effective and ineffective corporate decision-making nicely illustrate points in the chapter. The last chapter in this section, by George Hollenbeck and Morgan McCall, is intended to be provocative and challenges a central premise of executive development – the search for the holy grail of leadership competencies. They begin with an observation formed from years of experience – that leadership and executive development training have not lived up to expectations. They boldly assert that global executive development is not working. There are too few globally competent executives and the high failure rate is due, in large part, to an outdated model of executive development. Typical leadership programs focus on the acquisition of competencies (e.g. relational competencies). The underlying premise is that development follows in a deterministic manner with the eventual emergence of an executive upon acquiring the “right” set of competencies. I have much sympathy with the central thrust here as Hollenbeck and McCall argue that executive development should focus on competence, not competencies. So what does this have to do with leadership development? They suggest that the competency model
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of executive development must be supplemented with a model based on leadership challenges rather than the development of executive traits and competencies. Because executive jobs can be carried out in a myriad of ways, effectiveness depends on “what gets done” rather than “what one does,” which in turn is more important than “what competencies or traits one has.” This alternative development model begins by identifying challenges (not people), then works through identifying experiences (not programs) that might prepare people to meet the challenges, thus identifying the people who might learn from the experiences (not those who already know), developing mechanisms for getting those people into the experiences they need, and finally, providing appropriate assistance to aid learning from the experience. The trick, of course, is identifying which experiences provide the “richness” necessary for personal development, and for whom. To the extent that global leadership requires global experiences, the chapter by Hall (1999, Vol. 2 of this series) discusses the promise and problems inherent in international assignments as a developmental tool for executives. A common theme among these four chapters is that leadership, and more precisely, effective strategic leadership, is a key to global success. While each of the chapters discusses a different foundation, there are links between each because they all relate to strategic management. Trustworthiness is key leadership attribute. The Hitt, Keats and Yucel chapter directly focuses on the importance of a leader creating trust necessary for developing social capital and strategic success. The GLOBE leadership directed by House and colleagues (see House et al., 1999, Vol. 1) found trust to be a universally desired attribute expected to facilitate outstanding leadership. We know that establishing trust is particularly difficult after a merger, acquisition or establishment of joint ventures. Obviously, the leader’s role in developing trusting relationships throughout the organization is even more difficult in large multinational organizations, with their layers of leaders in various organizational entities. The Baik chapter stresses the leader’s role in sense-making as an important element of strategic management, and weaves the notion of trust into the audience-involving behavior of the leader. The Boudreau, Ramstad and Dowling chapter emphasizes the importance of shared understanding about strategic goals and resources by the firm’s people as keys to global success. The “glue,” as they suggest in this social network, that holds them together is the shared mindset that cannot be accomplished unless there is trust established within this key “talent” group. Hollenbeck and McCall discuss the importance of linking executive development to the business strategy. They also discuss the importance of talent and strategy, which are key elements in the Boudreau, Ramstad and Dowling chapter. The chapters in this section present a stimulating and challenging set of “foundations” for guiding our quest for a better understanding of global
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leadership, and for developing the “oars” and rudders we need to guide us in the face of the currents of globalization. As will become evident, these foundations are directly relevant to the cross-cultural and leadership development perspectives discussed in the later sections of this volume.
REFERENCES House, R. J., Hanges, P. J., Ruiz-Quintanilla, S. A., Dorfman, P. W., Javidan, M., Dickson, M., & Gupta, V. and 170 co-authors (1999). Cultural influences on leadership and organizations: Project GLOBE. In: W. F. Mobley, M. J. Gessner & V. Arnold (Eds), Advances in Global Leadership (Vol. 1). Stamford, CT: JAI Press. Smith, P. B., & Peterson, M. F. (1988). Leadership, organizations and culture: An event management model. London, UK: Sage. Weick, K. (1979). The social psychology of organizing (2nd ed.). Reading, MA: Addison-Wesley.
STRATEGIC LEADERSHIP IN GLOBAL BUSINESS ORGANIZATIONS: BUILDING TRUST AND SOCIAL CAPITAL Michael A. Hitt, Barbara W. Keats and Emre Yucel ABSTRACT To function effectively in both the near and distant future, leaders in global organizations must understand, develop and exercise trust and social capital. The competitive landscape in the new millennium necessitates that firms develop strategic flexibility. To do so, they must continuously renew their knowledge stock and produce innovations. To implement these strategies, leaders must build effective relationships among members and units in the organization. This relational capital is based on trust and eventually leads to the development of internal social capital. Leaders must also build effective relationships with external constituencies. This is often accomplished through strategic alliances. Similarly, leaders must build mutual trust among alliance partners that over time leads to the development of external social capital. When employees trust leaders, they are more likely to be committed to the organization’s goals, willing to develop firm-specific knowledge and likely to exercise creativity. Likewise, partners in trusting alliances are more likely to transfer knowledge, and contribute to a firm’s innovation. These actions are important in global organizations, but difficult to achieve.
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INTRODUCTION In the early days of the 21st century, the competitive battlefield has been strewn with mortally wounded firms and top executives. Once highly successful, firms such as Levi Strauss, Gap, Motorola and Arthur Anderson have experienced severe problems. Other previously powerful firms such as Polaroid, Enron and Global Crossing have filed for bankruptcy with people questioning their future viability. Additionally, the strategic leaders in several firms (i.e. Enron, Global Crossing, WorldCom) appear to have violated the “trust” placed in them by their multiple constituencies (e.g. investors, employees, suppliers, etc.). Clearly, major strategic errors were made by these firms. Top executives have either departed or are in serious trouble. These firms provide examples of strategic leadership failures. In the 1990s, we learned that firms existed in a new competitive landscape that differed from the past. This landscape is hypercompetitive and highly dynamic (D’Aveni, 1994). The monumental and discontinuous change in this landscape has been driven largely by new technology and globalization (Hitt, Keats & DeMarie, 1998), along with major political events such as those which took place on September 11, 2001. If we have learned little else, we now know that success is often only temporary. Firms must be constantly changing or they are dying. This means that firms must not only develop and implement successful strategies, but they must also create sufficient strategic flexibility to allow them to make often substantial and rapid changes in their strategies. Therefore, strategic flexibility is necessary to help firms cope with uncertainty (Harrigan, 2001). Faced with the increasingly complex and unpredictable global marketplace, businesses are becoming more dependent on virtual internal relationships and many forms of strategic alliances to maintain strategic flexibility. At the heart of these relationships are social capital and its root – trust. We define social capital as the web of social relationships between individuals and organizations that entails norms, values and obligations, and yields potential opportunities for the members (Gabbay & Leenders, 2001; Haley & Haley, 1999; Yli-Renko, Autio & Sapienza, 2001). With social capital, the relationships facilitate action and thereby create value (Adler & Kwon, 2002; Seifert, Kraimer & Liden, 2001). Strategic flexibility is partly a function of executive flexibility (Lee, Hitt & Jeong, 2002) and thus, strategic leadership. While much has been written about leadership over the years, only recently have we started to focus on strategic leadership at the top of companies (i.e. Finkelstein & Hambrick, 1996; Ireland & Hitt, 1999). Additionally, as noted by Keats (2002), history is written by the victors, therefore we often only hear the story from the victors’ perspective. There are good examples of historically successful leadership practices at the top of organizations, such as
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those presented in Jack Welch’s (2001) Jack: Straight From the Gut. However, the successful leadership of the past may not prove to be the best way to achieve success in the future. Also, there may be much to learn from leadership failures. Thus, here we examine successes and failures of strategic leadership, with special emphasis on the roles that trust and social capital play. Gessner, Arnold and Mobley (1999) noted that there is no commonly accepted definition of leadership, and a large number of leadership theories exist. Our purpose is not to offer the definitive theory of strategic leadership. Rather, we focus on the development of important capabilities that produce the strategic flexibility required to be competitive in the dynamic global business environment. Critical resources for firms operating in global markets include human capital and social capital (Nahapiet & Ghoshal, 1998; Quinn, 1992). Human capital represents the knowledge, skills and capabilities of individuals (Coleman, 1988) and is an especially important component of competitive advantage (Hitt, Ireland & Lee, 2000b). Social capital is useful in leveraging this knowledge (Burt, 1997; Coleman, 1988; Meyerson, 2000). In effect, social capital provides access to the capabilities needed to leverage a firm’s current resource base that then leads to a competitive advantage (Ireland, Hitt & Vaidyanath, 2002; Tsai & Ghoshal, 1998). Effective strategic leaders develop and exploit human and social capital. Managing human and social capital effectively requires an appropriate managerial mindset. In fact, a unique managerial mindset, different from that of the past, is needed to effectively navigate the 21st century’s dynamic and complex competitive landscape (Nixon, Hitt & Ricart i Costa, 1999). An entrepreneurial orientation is an important component of this mindset (Lumpkin & Dess, 1996). For example, the absence of entrepreneurial orientation prevented Polaroid from developing digital photographic technology, which led to its bankruptcy. Another important element of this mindset is trust. In fact, trust is a critical component of social capital because of the need for belief in reciprocity and mutual benefits for such capital to exist. Trust is important to foster collective risk taking (for innovation), and for knowledge transfer in firms (Portales, Ricart i Costa & Rosanas; 1998). Therefore, effective leaders must emphasize the development of a mindset of trust among the firm’s management team that emphasizes developing and nurturing important external relationships in order to develop social capital. Lastly, the mindset should have a global focus due to the increasing globalization (Hollenbeck, 2001). As such, managers consider global markets and competition, and build relationships with partners from multiple regions of the world. A mindset shared throughout the firm becomes a dominant logic by which the firm is managed (Prahalad & Bettis, 1986). While an appropriate dominant logic has several positive attributes, its effectiveness may fade in dynamic environments.
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An obsolete dominant logic retains inappropriate conceptual biases and may not match the firm’s current reality (Prahalad & Bettis, 1986). Additionally, without proper care a dominant logic creates a path dependency, thus making it difficult to recognize the need for change or to formulate and implement an effective strategic change (Lei, Hitt & Bettis, 1996). To create appropriate strategic flexibility, firms must be able to simultaneously acquire new knowledge and “unlearn” outdated and less valuable knowledge (Bettis & Prahalad, 1995; Hitt, Bierman, Shimizu & Kochhar, 2001a). Social capital provides access to information and valuable knowledge, thus creating a source of learning. Information gained through relationships with important external parties helps to identify opportunities. Prahalad and Hart (2002) argue, for example, that many emerging markets provide good opportunities for multinational firms. To take advantage of these opportunities, however, firms need access to distribution channels, knowledge of customers and markets, and relationships with government entities. They can gain access to these resources through alliances with emerging market firms (Hitt, Dacin, Levitas, Arregle & Borza, 2000a). In so doing, they build and/or use social capital to gain access to resources that allow them to exploit opportunities (Hitt, Ireland, Camp & Sexton, 2001b). Prahalad and Hart (2002) suggest these firms then find fortune at the bottom of the pyramid and bring prosperity to the aspiring poor. Firms rarely have all of the necessary resources internally to compete effectively in global markets. As such, firms must access complementary resources through relationships with other firms (social capital) (Ireland et al., 2002). To be successful, global strategic leaders must build and effectively manage human and social capital. This chapter explains the processes involved in managing these resources to create value for the firm.
STRATEGIC LEADERSHIP AND TRUST The GLOBE Research project asserts the importance of understanding interrelationships among societal culture, organizational culture and leadership in organizations (House, Hanges, Ruiz-Quintanilla, Dorfman, Javidan, Dickson & Gupta et al., 1999). Developing and “exercising” social capital depends on understanding these relationships and the pivotal role of trust in them. The assumptions underlying the acquisition and exercise of social capital largely emanate from cultural beliefs with regard to trust. Trust and trustworthiness are important factors in the formation and maintenance of social capital. History and literature suggest that trust is a universal concept in the human condition. Against the backdrop of national, organizational
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or interpersonal conflict, exist the enduring themes of trust and betrayal, faith and suspicion, responsibility and irresponsibility. Yet, the concept of trust has proved difficult to define and understand. We turn to that task first, and then develop a model of trust for strategic leaders as they build relationships with various important internal and external constituents.
What is Trust? Trust is a property of relationships – dyads, groups, organizations and nations (Lewis & Weigert, 1985). Trust and mistrust are also sociological/cultural phenomena. Thus, norms of trust may vary according to different understandings of morality and assumptions about human nature. These understandings are derived from general philosophies, cultural differences and specific characteristics of a prevailing zeitgeist. However, trust also has roots in individual characteristics. The exercise of trust involves three parts: the “trustor,” the “trustee” (both parties are simultaneously the trustor and trustee), and the context, which includes the roles of and relationships between people and the organization (Hardin, 1998; Nieuweboer, 2001). It may also include knowledge of behaviors involved in building and maintaining relationships (Bigley & Pearce, 1998). Trust is demonstrated by the “undertaking of a risky course of action on the confident expectation that all persons involved in the action will act competently and dutifully” (Lewis & Weigert, 1985, p. 971). Trust involves one’s “expectations, assumptions or beliefs about the likelihood that another’s future actions will be beneficial, favorable or at least not detrimental to one’s interests” (Robinson, 1996, p. 576). It includes elements of value and judgment, suggesting that there are expectations of ethical behavior in a joint activity (Hosmer, 1995). Additionally, it is a socially learned expectation regarding the behavior of others (Barber, 1983). Where differences between parties exist, such as cultural beliefs, lack of knowledge about the other party’s trustworthiness becomes important (Giddens, 1990). The factors noted above affect the trustor’s expectations about the trustee. In particular, the trustee’s trustworthiness in the eyes of current or potential trustors is quite important. Trustworthiness is difficult to define clearly, but is usually based on past behavior either in the current relationship with the trustor or with others familiar to the trustor. Common experiences or threats are often used to make assumptions about the other party’s trustworthiness. Winston Churchill was once quoted as saying “If Hitler invaded Hell I would make at least one favorable reference to the Devil in the House of Commons.” Churchill thus emphasizes the importance of a willingness to act against a common and worse enemy, in this case, Hitler. However, other factors also affect trustworthiness.
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Important elements of trustworthiness include: the history of the potential trustee’s behaviors in past exchanges (Curral & Judge, 1995), the prevailing norms for trusting others (e.g. power or a good reputation) (McKnight, Cummings & Chervany, 1998), and the trustee’s competence, reliability and integrity as perceived by the potential trustor (Mayer, Davis & Schoorman, 1995). Like trust, trustworthiness is socially constructed and grounded in cultural norms of behavior. Trust and trustworthiness are critical to business relationships both inside and outside of the firm, specifically within the management team and in the formation of strategic alliances between firms in the global marketplace. As noted by Reuer, Zollo and Singh (2002), studies of international joint ventures in the 1990s examined issues of environmental factors, cultural issues, transaction dynamics (such as opportunism), and partner characteristics (such as prior experience in collaboration). However, managing the ongoing alliance, of which building trust is an important part, requires additional investigation (Ireland et al., 2002; Reuer et al., 2002).
Trust and Alliances There are several perspectives with regard to inter-firm behavior and relationships. Two of the more prominent examples are Transaction Cost Economics (TCE) and Resource Dependence Theory (RDT). These perspectives address alliance formation and behavior quite differently. TCE suggests that organizations form alliances and govern the behavior within them on the basis of expected transaction costs and efficiency considerations. Governance is structured by formal contracts that outline monetary agreements and role behaviors, as well as members’ expectations. TCE employs typical economic assumptions about humans and their behavior. For example, it assumes that opportunistic behavior by one or more of the alliance members is likely. This assumption precludes or at least diminishes the role of trust. As such, TCE does not address the important social and relational processes regarding trust in alliance relationships. Resource Dependence Theory (RDT) explains how organizations seek to reduce uncertainty by creating favorable exchange relationships. Pfeffer and Salancik (1978) noted that individual organizations make strategic choices to collaborate with other organizations in order to gain economic advantages and promote market survival (perhaps even market dominance). If the benefits exceed the costs, the relationship is worthwhile (Provan & Milward, 1995). As we noted, collaborative strategic alliances can contribute to a firm’s strategic flexibility, shared resources and information and knowledge stock (e.g.
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intelligence). These actions and outcomes, however, may also make the partners vulnerable because each partner has knowledge of the others’ resources and services. Alternatively, the development of a strong relationship between the alliance partners helps them gain a sense of control (based on trusting the partner’s expected actions). Hence, trust can offset the potential costs of vulnerability in alliances. Hitt et al. (2000) conducted interviews with managers of several alliance partners that participated in their study. In one case, the U.S. partner was pleased with the alliance but the Mexican partner was not. The Mexican partner suggested that its U.S. partner did not care if it received benefits from the alliance. While there was a formal contract governing the alliance, there seemed to be little trust between the partners. The Mexican partner had plans to end the alliance at the end of the contract term. In contrast, another alliance between a U.S. firm and a Mexican partner seemed to involve significant trust. The U.S. partner communicated that there was no formal contract between the firms. The manager suggested that the Mexican partner was trustworthy based on its past performance so there was no need for a formal contract. In the first case, the Mexican partner felt vulnerable even though there was a formal contract because there was no trust between the partners. Yet, in the second case, no vulnerability was present even without a formal contract because of the trust that existed between the partners.1 Thus, the understanding of how firms manage alliances can be greatly enriched by realizing the importance of trust in these relationships and how it might be managed to form and maintain effective strategic alliances while avoiding bad ones. Good lessons come from the formation of, and behavior in, informal alliances. Informal alliances are the most common form of alliance, and are more social than purely economic relationships (Nieuweboer, 2001). Informal alliances have been examined in the publishing (Coser, Kadushin & Powell, 1982) and textile (Lorenzoni & Ornati, 1988) industries, among others. Eccles (1981) referred to them as “quasi-firms,” while Provan and Milward (1995) suggest that they consist of two or more firms that collaborate on separate but complementary goods and services within a particular industry. They may involve inter-firm exchanges, for example, or two firms sharing a single set of customers or customer information banks. Because they are not founded on formal market contracts or hierarchical forms of governance, effective informal alliances depend on trust (Larson, 1992; Ring & Van de Ven, 1992). Larson (1992) and Dore (1987) observed that mutual dependence, social norms and trust have profound effects on alliance partners’ behavior. The credibility and reliability of partners are influenced by shared beliefs held about obligations (Lewis & Weigert, 1985), and thus play a role in partners’ trustworthiness. This outcome is evident in the two alliances between U.S. and Mexican firms described above.
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Both trust and trustworthiness are important in the management of alliances. But managers, especially in western firms, often lack understanding of how they function in inter-firm relationships (Hitt, Lee & Yucel, 2002). Thus, there exists the need to further explore the role of trust and trustworthiness in a dynamic context of strategic alliances.
A Dynamic Model of Trust Individuals have an idiosyncratic orientation toward trust that derives from cognitive characteristics and personal histories, both of which are embedded in social and historical contexts. Elements of Trust Individual trust has two dimensions – stable and transitory. Stable traits are those differences that occur consistently in an individual’s responses across a variety of circumstances (Spielberger, 1972). We might say “John is a much more trusting person than Bill is.” Transitory states reflect an individual’s responses to an immediate set of circumstances (Spielberger, 1972). That is, over time we would observe that John more frequently responds to interpersonal circumstances with trust than does Bill. On the other hand, in any particular set of circumstances, Bill might respond with trust when John does not. Typically, both stable and transitory responses are involved whenever an individual is confronted with circumstances that require a decision involving trust or trustworthiness. When several potential trustors form collective judgments about, and take combined action based on the trustworthiness of a potential trustee, they exercise collective trust. Therefore, the critical component for a dynamic model of trust at the organizational level is the exercise of collective trust by management teams. Dominant Trust Because this “collective trust” is a characteristic of management teams, it may be manifested in much the same way as the firm’s Dominant Logic (Bettis & Prahalad, 1995; Prahalad & Bettis, 1986). Just as each member of the management team brings a unique set of cognitive abilities and experiences to the team that informs the dominant logic, each member of the team also brings an individual history of trust experience to the collective decision-making process. Thus, members of a management team develop a collective dominant trust (DT) through their interactions with one another and their organizational context, which also consists of stable and transitory components.
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When the management team encounters situations involving trust, the conditions of that situation will trigger a DT response – either to trust or not to trust. The consequences of the actions taken are either positive (confirming the appropriateness of the DT response) or negative (the DT response was inappropriate). In either case, those consequences will affect the future content of DT. Hence, DT is dynamic and subject to change, whether that change is intentional or unintentional. Failure to attend to this dynamic process will likely impair the firm’s strategic flexibility and overall effectiveness. While managers cannot directly affect the historical experience each member brings to a management team, they can affect team members’ interactions in various situations, particularly with regard to interpretive behavior. There are two important issues to be addressed in this dynamic process – building trust internally (among management team members), and building an effective DT for the formation and management of important external relationships, such as strategic alliances. As noted earlier, trust is important to the creation of social capital both within the organization and in inter-organizational relationships. The following two sections address these internal and external trust issues.
INTERNAL TRUST, SOCIAL CAPITAL AND LEADERSHIP Internal trust contributes significantly to a firm’s economic life in various ways (e.g. Gambetta, 1988; Mistzal, 1996; Rousseau, Sitkin, Burt & Camerer, 1998; Smith, Carroll & Ashford, 1995). For example, trust can strongly affect cooperation among employees and units while working on joint tasks (Mayer et al., 1995; Smith et al., 1995). We noted earlier that trust could provide a valuable addition to TCE theory. That is, trust in an organization decreases agency and transaction costs (Frank, 1988; Jones, 1995), and thus increases an organization’s ability to operate efficiently and to adapt to complex and volatile changes (Korsgaard, Schweiger & Sapienza, 1995; McAllister, 1995).
Building Internal Trust and Social Capital As noted in the introduction, strategic flexibility is needed to meet the challenges of today’s dynamic and competitive landscape (Hitt et al., 1998). Such flexibility is directly related to building trust within the management team. When trust exists in the team, individual team members are willing to think creatively, express new and different ideas and to take risks, in general. Through the effective
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management of trust, a top management team encourages broad participation and cooperation within multiple heterogeneous teams (Bass, 1985; Bryman, 1996; Bryman, Gillingwater & McGuinness, 1996). Heterogeneous teams are increasingly important business resources because of their use and integration of different knowledge stocks (Haleblian & Finkelstein, 1993), particularly in high velocity environments that require rapid utilization of diverse sets of information (Eisenhardt, 1989). The rapid application of knowledge and skills in heterogeneous teams is only possible when there is an environment of mutual trust among team members (Thamhain & Wilemon, 1977). Hitt, Nixon, Hoskisson and Kochhar (1999) describe the outcomes of a heterogeneous team in which little trust existed. They studied a new product development team composed of technical (e.g. scientists and engineers) and staff (e.g. strategic planning, marketing) professionals charged with the responsibility of developing an important new product for the firm. Although top management of the firm designated the team and established its primary goal, no effort was made to build trust in the team or to facilitate cooperation. The result was overt resentment expressed by the technical team members, especially toward the marketing team members. Because the technical team members represented the unit controlling the budget for the team activities, the technical co-team leader (with a marketing co-team leader), took over the team, blocking the marketing team members’ inputs. Marketing team members distrusted the technical team members’ efforts and eventually quit trying to participate. The team developed a new product design that was never implemented; the new product was technically well designed but did not have adequate features attractive to the market. As a result, the team failed to meet its goal and the firm failed to beat competitors to the market with a new product.2 This example suggests that leaders must be responsible for building this trust. In effect, leaders build internal social capital that allows joint actions within and by heterogeneous teams. Social capital offers a unique advantage to those charged with strategy making. Developing and maintaining trusting relationships (i.e. among employees, among units and between employees and leaders/managers) is the responsibility of the chief executive, who delegates it to team leaders, who in turn use it to promote collaboration (Morell, Caparell & Shackleton, 2001). Fortunately, social capital is a renewable resource as long as it is not abused. Trust facilitates communication and the flow of information within and among teams operating in the organization (Dutton, Ashford, O’Neill, Hayes & Wierba, 1997; Koka, 1999). Thus, relationships are critical to the transfer of knowledge in organizations (Hitt et al., 2001a). The most effective relationships require a collective and mutual trust between parties (trustees and trustors) (Jeffries & Reed, 2000; Wicks, Berman & Jones, 1999). Without trust, the relationship is likely to be contract- or rule-based and
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unlikely to promote the transfer of knowledge (Chow & Holden, 1997; Smith et al., 1995; Zaheer, McEvily & Perrone, 1998). Mutual trust is based on a process of interactions between leaders and members, which is used by leaders in dealing with team members. As such, truth and justice are critical to the process of building and maintaining trust. Truth and Justice Building trust, and hence social capital, requires honesty in interchanges between leaders and employees and among team members, as well as a perception of justice, particularly procedural and interactive justice (Clawson, 1999; Kim & Mauborgne, 1991). If a leader has exhibited integrity in the past, team members expect similar behavior in the future (Mayer et al., 1995). This expectation of integrity contributes to trust formation, stronger relationships, a willingness to take risks (innovate) and, ultimately, to the continued development of social capital. Interactional justice refers to the equality in interpersonal treatment that members receive from their team leader (Byrne & Cropanzano, 2001). Leaders who are honest with and display respect for their team members are the most likely to build trust. Trust is an important precursor to effective relationships and, eventually, to social capital. Interactional justice is considered a derivative of procedural justice. While distributive justice involves the fairness in outcomes received by individuals, procedural justice refers to the procedures used to determine the outcomes (Moorman, 1991). Thus, justice deals with the fairness of outcomes, procedures and the interpersonal treatment provided by the leader. Perceived fairness is critical to the development and maintenance of trust and effective relationships between leaders and team members (Zaheer et al., 1998). Commitment and Community Trustworthy leaders create an organizational climate of trust that fosters commitment on the part of employees and team members. Commitment is important to employees as they assess the value of continued membership in the organization, and is also important in the accomplishment of tasks and team goals. Trust and fairness in relationships foster commitment to the team’s and organization’s goals, and to the decisions made to achieve them. They create social capital that produces a spirit of cooperation, and a willingness to do what is necessary to achieve those goals. In fact, commitment facilitates the implementation of firm and unit strategies (Hitt & Tyler, 1991), and provides a foundation for developing a sense of community both among team members and employees in general (Lee, 2002). A climate of fairness (distributive, procedural and interactional) developed by leaders contributes to building community. Naumann and Bennett (2000) found
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that an effective justice climate produced cohesion among group members and commitment to the organization. They suggested that the leader played the most critical role in the establishment of this climate. However, they also found that the climate of fairness was more difficult to achieve with a heterogeneous membership. This result has important implications for leadership in international settings.
Opportunities and Challenges of Internal Social Capital The ability of the chief executive to create a climate of trust will allow him or her to shape the dominant trust of the management team. This becomes extraordinarily important when the context is one of building social capital in large transnational firms (Hitt et al., 2002). The cultural heterogeneity in the countries in which the firm operates poses challenges to the formation of the relationships needed to build trust, form dominant trust and create social capital. In some countries, social capital is a part of the interpersonal framework, such as “guanxi” in China. While guanxi greatly facilitates the development of social capital within the country or among ethnic Chinese, it also creates path dependencies in relationships and makes it even more difficult to form trusting relationships among employees and units that link China with other countries, particularly outside of Asia (Hitt et al., 2002). According to House, Wright and Aditya (1997), “What is expected of leaders, what leaders may or may not do, and the influence that leaders have, vary considerably as a result of the cultural forces in the countries or regions in which the leaders function” (p. 536). Even the meaning of justice and fairness can vary across cultures. Thus, trust is difficult to achieve in these settings. Regardless of the challenges, coordination and cooperation between individuals and units operating in different cultures and countries is critical for transnational firms, particularly in the development of the entrepreneurial mindset. Risk-taking, the heart of entrepreneurial thinking, is more likely to occur when an organization’s members trust their colleagues and leaders. Furthermore, in order for these firms to achieve economies of scope with their international strategies, coordination is required to share resources, activities and knowledge across units operating in different geographical markets (Hitt, Hoskisson & Kim, 1997). Trust is vital to this coordination, as is the expectation of procedural justice exercised by the leaders of the organization in conjunction with the subsidiaries operating in different countries across the globe. Procedural justice is important to a global organization because it communicates corporate leaders’ concern for fairness and the desire for involvement of subsidiary managers in the development and implementation of strategy (Kim & Mauborgne, 1993). Strong relationships between corporate and subsidiary managers allow
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subsidiary managers to provide input to and participate in the development of international strategies (Kim & Mauborgne, 1991; Luo & Peng, 1999). Of course, the subsidiary managers play a critical role in the implementation of those strategies, and thus their commitment to the organization and its strategies is important. To gain such commitment, leaders at the top of the organization need to build trust throughout the firm (Barney & Hansen, 1994). Therefore, they must develop a dominant trust (or collective trust) that forms the basis for decision making across the global operations. In this way, internal social capital is developed, almost a form of internal “guanxi,” that facilitates their interactions and collective work. The utilization of internal social capital, for example, can overcome many bureaucratic and organizational obstacles to achieve diffusion of innovation. Thus, we conclude that internal trust and social capital are vital ingredients to effective leadership in global organizations.
EXTERNAL TRUST, SOCIAL CAPITAL AND LEADERSHIP To be an effective leader in global organizations requires that trust and social capital be developed in relationships with other organizations, particularly in strategic alliances. The number of strategic alliances has increased dramatically in recent years. For example, U.S. firms with at least $2 billion in annual revenue formed an average of 138 strategic alliances from 1996 to 1999. There were over 10,000 alliances formed in the year 2000 (Schifrin, 2001). Many of these alliances were formed with firms with home bases in other countries (i.e. in Asia, Europe, Latin America). Some of these alliances are informal, but many represent formal inter-firm collaborations (Simonin, 1997). Very few firms have all of the resources or knowledge needed to successfully compete in many global markets. Thus, they form alliances with other firms to gain access to resources that are complementary to their own. In general, strategic alliances provide access to information, special resources, technology and markets (Hitt et al., 2001b). Unfortunately, many of these alliances fail, suggesting problems in their formation or management (Reuer, 1999; Young-Ybarra & Wiersema, 1999). We argue, along with others, that a common reason for their failure is an absence of trust, which makes it difficult for the firm to build and exercise social capital. The problem in the strategic alliance between a U.S. and Mexican firm described earlier provides an appropriate example. The Mexican firm did not trust the U.S. firm to reciprocate in the relationship and thus neither firm had social capital with the other. The lack of trust and social capital led to the demise of the alliance between the firms. If firms do not trust their partners, they will be less willing
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(or unwilling) to allow access to their resources (e.g. knowledge, technological capabilities). Given that one of the primary reasons that alliances are formed is to gain access to the partner’s resources, a lack of trust can lead to failure of the alliance. The follow-up interviews conducted by Hitt et al. (2000) suggested that a lack of trust and reciprocity between alliance partners reduced the alliance’s effectiveness. Clark and Matze (1999) suggest that leaders must develop a relational competence that involves effective management of relationships across diverse settings. Such relational competence requires good communication and interpersonal skills. A relational competence also involves the ability to understand and empathize with heterogeneous partners. But most of all, we argue that relational competence entails the development and maintenance of trust and trustworthiness among partners. Trust among partners in strategic alliances builds social capital, thereby contributing to the success of the alliance and to the development of other alliances. Kale, Singh and Perlmuter (2000) argue that relationships producing social capital are based on mutual trust. Partners must trust each other in order to allow access to resources and the transfer of knowledge. Lane and Lubatkin (1998) suggest that strategic alliances allow partners to work closely enough to transfer even tacit knowledge. However, firms are unlikely to allow partners close enough to learn tacit knowledge unless there is trust between them (Barney & Hansen, 1994). In support of this notion, Tsai and Ghoshal (1998) found that resource exchange was higher between organizations that enjoyed mutual social capital. In other words, firms are willing to share their resources with partners when they expect that their actions will be reciprocated. As noted earlier, trust substitutes for more costly forms of monitoring and control in alliances. When control is exercised through a formal contract, it is enforced by partners’ monitoring each other’s behavior (Das & Teng, 1998). Essentially, contracts and monitoring of partners’ behavior are used to prevent opportunistic behavior by partners. However, relationships based on formal, contractually-specified behaviors are unlikely to allow maximum access to partners’ resources. Furthermore, the monitoring required can greatly increase transaction costs. Take, for example, the two alliances between U.S. and Mexican firms explained earlier. One of the alliances was based on a formal contract and the other one had no formal contract. The alliance based on the formal contract was unsuccessful and failed, yet the one without a formal contract was successful. In the successful alliance the partners trusted each other and developed social capital over time. As a result, no formal contract was believed to be necessary. If firms act opportunistically, the alliance will fail. Hamel (1991) argued that strategic alliances provided an opportunity for learning races between partners.
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The firm that learns the desired capabilities first can dissolve the alliance before its partner learns its capabilities. Then, the firm with the new capabilities can possibly become the former partner’s competitor and gain a competitive advantage. Similarly, Inkpen and Beamish (1997) suggested that after firms obtain the desired knowledge, their motivation and need for the alliance may be diminished. In this case, cooperation may cease, and eventually the alliance will fail and be dissolved (Ireland et al., 2002). Trust implies vulnerability between partners; where there is mutual trust, there is also mutual vulnerability. Social capital is built when the trust placed in a partner is rewarded with mutual benefits. With social capital, there is an implied responsibility to cooperate and help the partner; there is an expectation of reciprocation at some time in the future. As a result, norms of reciprocity develop. Thus, effective leaders must work to build trust in strategic alliances. Often, trust and social capital in alliances are based on interpersonal relationships among the leaders representing each partner. Thus, social capital is based on relational capital and relational capital is based on relational competence. Leaders with high relational competence emphasize mutual growth and returns for all involved in the relationship (Clark & Matze, 1999). Eventually, the most effective leaders try to develop a collective trust between the parties that transcends individual leaders (Beekman & Robinson, 2002). Cultural, economic and institutional differences across countries make trust between partners in international strategic alliances difficult to achieve (Hitt et al., 2000a). Cultures and institutional frameworks affect the mindsets of managers operating within them (Peng, 2000). For example, the cultural and institutional differences between China and the U.S. are significant. Thus, managers of firms in China and the U.S. may experience trouble developing trusting relationships in alliances with each other. Differences in the legal protection of intellectual property rights can create conflicts or distrust. Additionally, the emphasis on relationships as a way of doing business in China (guanxi) is much greater than in the U.S. Thus, Chinese managers believe strongly in building relationships, whereas U.S. culture places more emphasis on contractual forms of control (and relationships). Yet, trust is critical to the sharing of resources and knowledge in these alliances. Partnerships in which there is greater interdependence and to which the alliance is highly important have incentive to develop mutual trust (Luo, in press). Mowery, Oxley and Silverman (1996) found that greater knowledge transfer existed in alliances where both partners owned equity. Even equity arrangements do not fully substitute for mutual trust. For example, equity arrangements do not prevent learning races. Therefore, it remains incumbent on leaders in partner firms to use their relational competences to establish trust and build relational capital (Cullen, Johnson & Sakano, 2000).
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OUTCOMES OF LEADERSHIP BASED ON TRUST AND SOCIAL CAPITAL While there are many potential outcomes from the process of leaders building internal and external trust and social capital, we will emphasize three – alliance success, building knowledge and innovation. These three are interdependent.
Alliance Success First, we conclude that mutual trust leading to the development of social capital is a necessary prerequisite for successful strategic alliances. The cost of failure in strategic alliances can be very high. Assuming that firms form alliances for increased access to resources, a failed alliance suggests that access to those resources is lost. The resources were needed to gain or maintain a competitive advantage. Thus, an alliance failure provides opportunity for another firm to gain a competitive advantage in the market. Even if the alliance does not fail, the lack of mutual trust will disallow achieving maximum returns from the alliance. Partners will not share their most valuable resources without trust. Therefore, trust among alliance partners could mean the difference between competitive parity and advantage or worse – the gain or loss of market power. If firms form an alliance to gain access to resources, they will not be able to obtain those resources without mutual trust between partners. Trust also reduces the cost of an alliance (i.e. reduces transaction costs). Trust limits the need for monitoring a partner’s actions or developing elaborate formal contracts. Formal contracts rarely maximize returns from alliances. The effects of trust and outcomes of contracts can be seen in the two alliances between U.S. and Mexican firms explained earlier. In the strategic alliance with the formal contract, the Mexican firm did not trust the U.S. firm to help it gain benefits from the relationship and the alliance failed. In the other strategic alliance, no formal contract was used because of the mutual trust between the two firms. This alliance appeared to have been successful over time. Trust affords the opportunity, then, to develop a collaborative advantage (Dyer, 1997; Lado, Boyd & Hanlon, 1997). The success of an alliance may be at least partially based on the ability to transfer knowledge. Recently, Citigroup, a massive financial organization, has experienced a “crisis of trust.” Its linkages to the Enron and WorldCom debacles and bankruptcies, the lawsuits filed by three California state pension funds against the firm for “illegal conflicts of interest” in the WorldCom case and its subsidiaries’ questionable practices regarding loans to high-risk clients have sullied the firm’s reputation. While the vast financial assets of Citigroup will likely help it develop additional alliances
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in the future, potential partners may be more wary of developing relationships and will monitor their behavior more closely. A recent speech by Citigroup CEO, Sanford Weill referred to the importance of integrity and trust. He stated that, “When all is said and done, we must recognize that neither we as leaders, nor the companies we head, can regain the confidence of the public without instilling within our corporations a dedication to integrity above all else” (Beckett & Sapsford, 2002).
Building Knowledge Grant (1996) suggested that a firm’s knowledge is a highly important competitive asset. Additionally, Spender (1996) argued that knowledge, and the ability to generate specific and valuable knowledge, are at the core of the firm. As such, knowledge forms the basis for competitive advantage. Firms that know more about their markets, customers, suppliers and competitors, as well as their own technology, can sustain a competitive advantage. Given its importance, how firms gain access to and build knowledge is a highly important competitive issue. Firms can build their knowledge stock by developing it internally or by learning from external sources. Effective leadership is critical to both. Some knowledge can be stored in organizational routines, but most important tacit knowledge is held by the firm’s human capital (Hitt et al., 2001a; Liebeskind, 1996). Thus, a primary means for a firm to build knowledge is to develop its human capital. Most important to the firm is the development of employees’ tacit and firm-specific knowledge. However, to do so requires effective leadership (Hitt et al., 2001a). First, leaders must encourage their followers to learn new skills and gain new capabilities. Next, they must facilitate the learning process. But most importantly, leaders must build effective relationships and trust with employees for them to be willing to develop tacit and firm-specific knowledge. Building firm-specific knowledge entails skills that are unlikely to be valuable to other firms. These skills do not aid employees’ job mobility. Thus, they must trust their leaders. Furthermore, leaders must build commitment to the organization and community in an effort to encourage employees to develop and apply new knowledge. Relationships play a prominent role in employees’ willingness to apply this knowledge to help the organization gain a competitive advantage. Another means of knowledge building involves the transfer of information between partners in an alliance (Kogut & Zander, 1993). As noted earlier, a major reason alliances are formed is to acquire new capabilities and to gain access to knowledge that boosts a firm’s competitive advantage, such as cutting-edge technology (Dyer & Singh, 1998). Learning and knowledge transfer are difficult to achieve. Leaders from both firms must work to establish mutual trust and
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social capital so that each partner feels that the transfer of knowledge is not risky. Without the trust that produces social capital, there is potential for a learning race, or actions that buffer critical knowledge (e.g. technology) from partners, especially in international strategic alliances (Barney & Hansen, 1994). Building new knowledge is often important in the firms’ innovation development process.
Innovation Hamel (2000) argues that firms must be innovative if they are to achieve even competitive parity and to navigate in a dynamic competitive landscape (Hitt et al., 1998). In fact, Hamel argues firms must create innovation or they will be replaced by more innovative competitors. Amit, Lucier, Hitt and Nixon (2002) make a similar argument and suggest that new winners in the business environment often emerge quickly based on a disruptive innovation they develop and introduce to the market. Hamel (2000) reported research findings suggesting that most industries are changed by newcomers rather than by incumbents. Of course, internal processes are critical to innovation. For example, many firms use cross-functional teams to develop innovation (Hitt et al., 2000b). The productivity of these teams, however, is predicated on the quality of their leadership. While heterogeneity among individuals’ knowledge stocks on these teams lends itself to innovation, the diversity of perspective and approaches, as well as knowledge bases, require effective leadership to build relationships among team members. In addition, commitment and a sense of community are necessary for the knowledge to be integrated and to produce innovative ideas. Moreover, proposing creative ideas can be perceived as risky. People must trust the leader and team members to propose such ideas. Trust is even more important in the development of creative ideas into inventions that are then commercialized. People must trust that they will not be penalized for failures (Smith & Di Gregorio, 2002). Without effective leaders who build trust and social capital among team members and within the organization, innovative efforts such as these are doomed to failure. Robert Reich, the former U.S. Secretary of Labor, argued that when firms invest in their employees’ learning and development, provide them with autonomy and consider their personal aspirations, the result is increased trust and employee energy directed toward innovation (Reich, 1998). External trust and social capital can also contribute to a firm’s innovation. For example, some firms use strategic alliances to enhance their innovation. Networks of alliances provide information to firms and help them identify opportunities (e.g. in the market) (Cooper, 2002). Other firms use alliances for their
Strategic Leadership in Global Business Organizations
Fig. 1. Model of Trust, Social Capital and Strategic Flexibility.
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resources and knowledge, which can prove helpful in developing innovations (Anand & Khanna, 2000; Dussauge, Garrette & Mitchell, 2000). Finally, some firms enter alliances to learn new skills that directly enhance innovative capabilities. For example, Rothaermel (2001) found that large pharmaceutical firms were able to increase their innovation by learning about new technology through alliances with newer biotechnology firms. Firms can only obtain the needed benefits from alliances when leaders have established mutual trust among alliance partners and built social capital. Without trust, partners are unlikely to transfer knowledge or other desired resources. There must be a free flow of communication and norms of reciprocity among the partners. Successful alliances, knowledge and innovation are outcomes of social capital based on strong relationships (with internal and external constituents) and trust. In turn, these outcomes contribute to a firm’s strategic flexibility. Alliances provide access to resources the firms do not possess, allowing them to develop and implement new strategies. New knowledge contributes to the development of new capabilities and possibly even new core competencies that can produce a competitive advantage. Finally, innovation can help firms to enter new markets and remain ahead of their competition. These relationships are presented in the model shown in Fig. 1.
CONCLUSIONS We have established that leaders must build trust as part of their relational competence. Leaders apply relational competence in order to build relational capital, which in turn leads to the development of social capital. These actions are necessary in internal and external relationships. Effective leaders build trust within the organization through displays of integrity and fairness. They demonstrate distributive, procedural and interactional justice. They build trust in external relationships through effective communication and the establishment and practice of norms of reciprocity. Establishing trust and reciprocity norms is more challenging in global organizations (crossing country boundaries) because of the firms’ heterogeneity and diversity. Leadership that builds trust, and eventually social capital, is even more critical in these environments and organizations. An entrepreneurial mindset is needed to identify and exploit significant opportunities (McGrath & MacMillan, 2000). In fact, recent work suggests that the most effective firms practice strategic entrepreneurship in which opportunities are actively sought while simultaneously seeking to achieve competitive advantages (Hitt, Ireland, Camp & Sexton, 2002). Information and ideas are needed to identify opportunities. Resources and knowledge are often required to exploit those
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opportunities and to establish a competitive advantage. A free flow of information and ideas in the organization, and access to resources and knowledge externally occur through the relationships that leaders build with internal and external constituents. Effective relationships are built on mutual trust. Over time, effective relationships promote the development of social capital. The logical conclusion is that effective leadership produces relationships that help firms build knowledge, produce innovation and disruptive technologies (Ahuja & Lampert, 2001), and help firms gain competitive advantage. This type of leadership is especially critical in global organizations.
NOTES 1. The managers were promised anonymity for them and their firms in order to participate in the study. Therefore, the firms mentioned must remain anonymous. 2. The name of the firm must remain confidential as promised by the researchers.
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ISSUE LEADERSHIP THEORY AND ITS IMPLICATIONS IN GLOBAL SETTINGS Kibok Baik ABSTRACT In this paper, we explore a new leadership theory termed “Issue Leadership,” where a leader is considered to be a person who looks for critical issues in the ordinary, involves the audience (i.e. those who are directly or indirectly related to a particular issue) in an effective way, and achieves outstanding performances and desired changes through efficient implementation of a proposed issue. Specifically, an issue leader is required to exhibit three distinctive behaviors: issue-creating, audience-involving, and issue-implementing. Antecedents and moderators of issue leadership behavior are identified, and their interrelationships are proposed in a comprehensive issue leadership model. After a detailed explanation of the issue leadership theory, we researched, and tried to answer the question, “How do we apply the theory to global business settings?”
INTRODUCTION Almost a century has passed since scholars began studying the modern concept of leadership. Countless leadership theories have flourished during that time, from trait theory through situational leadership theories to recent theories of leadership that center around changes and vision.
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Though extensive in volume, the existing leadership literature suffers from several limitations that decrease the generalizability of such research findings. First, most leadership theories put too much emphasis on the softer side of performance. The criterion variables employed do not typically go beyond satisfaction with the leader and organizational commitment (e.g. Conger & Kanungo, 1987). Though meaningful in leadership research, these soft variables are not a substitute for harder variables like productivity, quality improvement, innovation, patents and team or organizational performances, which most practitioners are equally, if not more, interested in. Second, most leadership theories have been criticized by practitioners for not being specific enough to tackle the problems that leaders encounter every day. Third, the existing leadership theories are not developed to meet the evolving demands of the digital era, which is characterized by speed, virtuality and discontinuity. The advent of the Information Age accelerated the speed of information exchange, and barriers caused by geographical dispersion were lessened by the formation of virtual teams and the nature of change became discontinuous. These are new challenges to leaders so a new leadership theory should predict the behaviors that could help cope with the new challenges. In an effort to cope with these challenges, the new Issue Leadership (Baik, 2000) was presented. In this chapter, I will describe the concept of Issue Leadership Theory and then suggest a research agenda demonstrating to how the theory applies to global business settings.
THE ISSUE LEADERSHIP THEORY The crux of issue leadership theory lies in the definition of issues and their role in the leadership context. Various writings have dealt with the concept of issues from different perspectives. Public policy literature, for example, focuses on the policy issues that may impact on an organization unless proper attention is given to them. The public policy literature suggests that organizations adopt some type of issue management system (e.g. Gaunt & Ollenburger, 1995) to deal with these situations. A similar line of logic can be found in strategic management literature. In this category, methods of strategic issue management are suggested that emphasize corporations’ systemic responses to social, political, economic, competitive, and organizational issues. Strategic issues may originate inside and outside of organizational boundaries (e.g. Dutton & Ottensmeyer, 1987). In issue-selling literature, the main research question could be expressed as “How middle managers could correctly read contexts in order to successfully sell issues to top managers.” The literature identifies conditions and processes in which the issues raised by middle managers can be sold successfully to top managers (Dutton, Ashford, O’Neill
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& Lawrence, 2001). Also, in the moral development and accounting literature, a Defining Issues Test (DIT) is widely used to measure an individual’s capability for moral judgment. Based on Kohlberg’s (1969) justice-based stage model of moral judgment, the DIT requires respondents to choose between issues of ethical dilemmas (Rest, 1979). In addition, the innovation championing literature richly describes how idea champions introduce or create changes in processes, products or management methods within an organization (Howell & Higgins, 1991). The process of championing has been specified in many ways: detecting new ideas (Kanter, 1983); framing an issue in a particular direction; introducing new perspectives that produce pressure on organizational decision makers to take action (Andersson & Bateman, 2000); overcoming resistance to innovative ideas in established organizations (Van de Ven, 1986); and adopting an idea and taking risks to ensure successful implementation of those ideas (Frost & Egri, 1991). Although the literature has dealt with the issue concept from diverse standpoints, richer and broader explanations are needed from a leadership perspective because it could integrate the interactions among issue owners, issue followers and the contexts and processes of issue implementation. In the public policy and strategic management writings, the focus of analysis is laid on the issue itself and its related environment, excluding the people who deal with them. The issue-selling literature focuses on people – the middle managers who deal with issues – but fails to incorporate the entire issue-related process. In the moral judgment literature, an individual’s standards of right and wrong are tested against predetermined levels of development, confining the issue concept to an intra-person construct. The idea championing literature also ignores the critical part of the process – how the champion influences other organizational members by shaping and directing their behaviors and thought processes. As such, each of these literatures has dealt with the concept of issue dynamics in organizations from too narrowly defined viewpoints, which necessitates the development of a more comprehensive framework that combines different perspectives into a coherent standard. To this end, we take the leadership concept, and define a leader as a person who deals with the issue process life cycle from development to implementation while influencing, and being influenced by, the people associated with the issues at hand.
The Definition of an Issue Issues have been defined in different ways depending on which literature you deal with. In public relations literature, for example, issues are described as:
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“Issues are not simply questions that exist. An issue is created when one or more human agents attaches significance to a situation or perceived ‘problem’ ” (Crable & Vibbert, 1985, p. 5). Dutton and Ottensmeyer (1987) further identified two types of issues – those originating inside the organization’s boundaries, and those originating outside its boundaries. Internal issues are the ones that can be dealt with primarily within the organization and out of public view, while external issues require public policy scanning and early intervention to help combat unwanted legislation (Gaunt & Ollenburger, 1995). The public policy literature suggests systemic management of issues at an organizational level and distinguishes two different systems of managing issues, “Issues Management” and “Strategic Issues Management.” Issues Management represents a system that deals with public policy issues and focuses on corporate responses to social, political or economic issues with the potential to generate a social or political response. The system of Strategic Issues Management mainly deals with strategic and competitive issues as defined below. The issue selling literature focuses on strategic issues. Strategic issues are defined as events, developments or trends that are viewed as having an impact on organizational performance (Ansoff, 1980). An issue is considered strategic when top management believes that it has relevance to organizational performance. The issue selling literature, therefore, emphasizes the process that middle managers invoke to try and win top management’s time and attention. Specifically, issue selling refers to those individual behaviors that are directed at affecting others’ attention to and understanding of issues (Dutton & Ashford, 1993). In addition, the moral judgment literature defines an issue as a conflicting situation that awaits individuals’ moral reasoning. In an effort to describe the developmental nature of moral judgment, Rest (1979) identified three different levels of moral judgment: Pre-conventional, Conventional and Post-conventional. As one moves from Pre-conventional to Post-conventional, one uses different bases to judge an issue, which range from “individual’s self-interests” to “social cooperation.” This is considered analogous to the measurement of an individual’s political orientation toward controversial social, political and economic issues (Fisher & Sweeney, 1998), from conservative to radical. As discussed earlier, an issue can be defined as a potential problem or an opportunity to which individuals attach meaning. An issue emerges and is defined as a result of social interactions among similar audiences. Since an issue is considered a social phenomenon, it does contain strategic issues, but doesn’t stop there. In other words, shared issues can guide social interactions, including interactions between a leader and his/her audiences. Leaders guide audiences (or followers) by developing issues that have significant meanings attached to them. The issues are stages where the actor (the leader) and the audience come together and share
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each other’s attention. However, the leader is not designated or predetermined beforehand. Anyone can play a leader’s role if he/she serves the audience better than others. The one who works for an issue the most effectively will emerge as the leader. Therefore, managers and executives of organizations need to be prepared with skills to effectively develop and handle issues in order to become leaders. Issues may take several different formats. Issues may be routine, incidental or innovative. Routine issues are repetitive and require automatic information processing, whereas incidental issues are responsive and require controlled processing (Lord & Maher, 1991). Innovative issues are those that leaders proactively initiate based on predetermined purposes and plans. These three types of issues differ in effectiveness for capturing an audience’s attention. Based on the attention-based view of firm behavior (Ocasio, 1997), it can be inferred that leaders rely more on innovative issues than on routine or incidental ones when attempting to win an audience’s attention.
The Concept of Audience When we understand the leadership process from the standpoint of issue activities, the leader-versus-followers dichotomy is not useful. The term “followers” implies passive compliance to the hierarchical authority represented by a leader. The concept of “audience” means that the relationship is circular, with the leader at the center and the audiences surrounding him or her. The audience includes superiors, peers and subordinates in an organization, as long as they relate to the issues at hand. The leader may also invite audiences outside of the organization who somehow relate to the issue, or are thought to be helpful or play as an obstacle in studying the issue at hand. Regardless of the hierarchical rank, organizational managers, executives or employees may formulate or create issues, attract audiences germane to the issues, and implement issues through well-organized procedures. Depending on the issues, different persons could emerge as leaders or audiences. One may serve in a leadership role for one issue and an audience role for another. And he/she may pursue several issues simultaneously as a leader or as part of the audience. In special cases, a leader may delegate the issue to a spokesman and never or seldom interact with the audience directly. Even in this case, the ownership of the issue belongs to the leader, since it was the leader who created the issue and delegation was made only for implementation. Hence, in the issue leadership context, the equation doesn’t stand that the superior is the leader, and the subordinates followers. A subordinate may lead a superior by involving him/her in the process of issue creation, persuasion and implementation. The superior may play the role of audience (or follower) by
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providing the subordinate with various resources, moral support, information and connections with higher managers. The process by which middle managers find and sell issues to top executive audiences is described in the issue-selling literature (e.g. Ashford et al., 1998). In our context, however, the audience should include peers, subordinates and external experts – anyone who is related to the issue regardless of unit or organizational boundaries. The Issue Leadership Model We have defined issue leadership as a process in which a person guides the audience by creating issues, involving the audience, and implementing the issue. In order to complete the model, we need to specify of what dimensions the issue leadership behavior is composed, and to justify how they relate to antecedents and consequences. Issue leaders show three distinctive behaviors – issue-creating, audienceinvolving, and issue-implementing. When a leader is good at conducting these behaviors, he/she is more likely to achieve higher performance. Some people, however, possess more potential than others in demonstrating these issue leadership behaviors. Specifically, at least one antecedent variable, motivation to lead, may influence the level and intensity of issue-creating, audience-involving and issue-implementing behaviors (Chan & Drasgow, 2001). As shown in Fig. 1, it is also posited that the relationships between the antecedents and issue leadership behavior are moderated by organizational culture. Although a person may possess the potential to exercise issue leadership behavior, he/she may actually have difficulty doing so due to situational or cultural constraints. Hence, the following can be proposed:
Fig. 1. The Issue Leadership Model.
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Proposition 1. The issue leadership behavior will be composed of three distinctive behaviors – issue-creating, audience-persuading and issue-implementing. Proposition 2. The issue leaders who show all three issue leadership behaviors will be more effective than those who do not.
Issue Leadership Behavior Issue-Creating Behavior Leaders are proactive. They seek better ideas, innovative issues and an improved understanding of their environment. They differentiate between what is important and what is not. Important and attractive issues are the tools that leaders use to draw audience attention. Therefore, leaders need to have the skills necessary to create issues that could be accepted by the audience as significant and worth pursuing, and as those that exert significant impact on performance and carry distinct organizational meanings. Many writings, such as sense making (Weick, 1979), proactivity (Saks & Ashford, 1997), and personal initiative (Frese, Kring, Soose & Zempel, 1996) relate to a leader’s proactivity. Leaders influence others utilizing various behaviors such as consideration, stimulation, participation, and so forth. In the issue leadership context, it is suggested that leaders influence audiences through issue-creating activities. The effective creation of issues involves a series of specific behavioral dimensions, such as: (1) sense-sharing, (2) issue-articulating, and (3) implementation-designing. Each will be explained in detail. Leaders’ sense-sharing behavior is critical to influencing others in the issuecreating process. Sense sharing starts with sense making. In the organizational behavior literature, the sense-making concept (Weick, 1979) is well researched. The same concept could also apply in the leadership context. Leaders make sense of their environments by defining various events, the people involved, the relationships among them, and the history of the organization to which they belong. The pictures drawn, or the inferences made, in the leaders’ mind will determine their ensuing behaviors and decisions when guiding the audience. Leaders are not just sense-makers but they are also sense-sharers (Hill & Levenhagen, 1995). They make sense of their surroundings, and then attempt to share their perceptions with others. While sense-making is a personal, cognitive process, sense-sharing is a social phenomenon. The sense-sharing process is an interpersonal process that leaders use to influence their audience and vice versa. Leaders and the related audience share senses by way of discussing common interests, problems and opportunities, as well as through the exchange of ideas
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and information. In fact, the ordinary communication process is considered a sense-sharing process, where the results of each participant’s sense-making are revealed, compared, interpreted, adjusted, and evaluated by others. Sense-sharing involves sense-giving and sense-taking (Gioia & Chittipeddi, 1991), but goes beyond them. It also engenders the dialectical creation of a third sense through the interactive communication process. Charismatic leaders (Conger & Kanungo, 1987) are skilled at imposing their senses upon others, whereas transformational leaders (Bass, 1985) are eager to change followers’ senses. Issue leaders, however, focus on the creation of a third sense shared with close or distant audiences. Issue leaders exchange senses with their audiences based on partnering relationships. They encourage each other to find a fresh frame of understanding and innovative senses, which result in issues that could exert extraordinary influence on performance. We find ample evidence of sense-sharing in related literatures. Wrzesniewski and Dutton (2001), for instance, defined employees as active crafters of their work. They proposed that employees craft their jobs by changing cognitive, task and/or relational boundaries to shape interactions and relationships with others at work. As a result of job crafting, both employees’ work identities and definitions are revised. It is not difficult to imagine that employees also craft others’ work. In other words, they voluntarily analyze what others do as well as what they do. Extending this argument, we propose that employees share crafted identities and implications of their work with each other, hence exchanging and reaffirming each other’s organizational contexts. Sense-sharing, just like sense-making, is of a proactive nature. The “proactivity” literature suggests that employees’ proactive behavior consists of such components as information seeking, feedback seeking, relationship building, and positive framing (Wanberg & Kammeyer-Mueller, 2000). These four components could also serve as techniques for initiating the sense-sharing process. Leaders seek information and feedback from audiences concerning their roles and expectations as well as the task environments that confront them. Relationship building refers to behaviors that are directed at initiating or intensifying social interaction in the work environment. A favorable relationship established between a leader and audience will make it easier to share senses. Research on Leader-Member Exchange (LMX) theory reveals that the quality of the leader-member relationship determines the level of sharing of ideas and information in that relationship (Liden et al., 1997). Thus, it can be inferred that the quality of relationships influences the nature of sense-sharing. Positive framing, as defined by Ashford and Black (1996), is a proactive technique that enables leaders to alter their understanding of a situation by explicitly controlling the cognitive framework they place upon the situation. In other words, the senses a leader makes may be adjusted later through this positive
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framing process. Positive framing turns perceptions of threats or problems into that of opportunities. When detected by the audience in a social arena, a leader’s positive framing will influence the process of sharing frames and senses. Thus, leaders continuously share senses with an audience by monitoring and redefining their tasks and environment. Based on these arguments, the following proposition can be made: Proposition 3. Leaders’ issue-creating behavior is proactive in nature, and involves three specific behavioral dimensions such as sense-sharing, issue-articulating, and implementation-designing. Proposition 4. Issue leaders proactively share senses with audiences on each other’s roles and organizational contexts to create innovative issues. In this joint sense-sharing effort between a leader and audience, issues will be molded, prioritized and scrutinized. We label this stage of issue creation “issue articulation.” Issue articulation means that the process of issue creation is specified and expressed in words and sentences. The way an issue is expressed determines its characteristics. An articulated issue could be characterized by five dimensions: challenge, receptivity, clarity, novelty, and impact. In goal-setting literature (e.g. Locke & Latham, 1990), some of these characteristics are well documented as those that stimulate employees’ motivation at work. Challenging and specific goals, for example, are found to be more motivational than easy or ambiguous goals. In addition, goal acceptance is considered an important moderator in the goal-setting context. A challenging issue is one that could give audiences a sense of achievement when accomplished. Such an issue is perceived as worthwhile to pursue since it carries special meaning to the audience involved. The power of such accomplishments is much stronger with challenging issues than with easy-to-accomplish issues. An issue becomes challenging not just because of its level of difficulty, but also because its nature is complex and the stakes are high. Furthermore, challenging issues are sometimes extra-role issues. Issues that go beyond one’s task or role boundaries require additional research and preparation. In general, it can be inferred that innovative or incidental issues are more challenging than routine issues. Issue receptivity means the extent to which the audiences are ready to accept or demonstrate commitment to a particular issue. The more closely senses are shared between a leader and audience, the more receptive the audience becomes to an issue. An audience becomes more receptive to an issue when it is articulated in a way that gives the audience a feeling of accountability and significance. Dutton and Ashford (1993) said that issues sell well when they imply the buyer’s responsibility,
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and are packaged or linked with other important issues or goals. The audience’s receptivity is important because they must be involved in the implementation of an issue and can facilitate or harness the process. Issues should also be expressed in clear terminology. When clarity is muddled, no issue can survive the latter stages of the issue leadership process. Issues not clearly expressed build up ambiguity and conflict among related people. One reason for ambiguity in issue description is the occurrence of insufficient sense-sharing. More time and opportunity is required for the exchange and adjustment of senses before an issue is settled and publicized. An issue becomes clearer as it moves through its life cycle (Hainsworth, 1990). According to Crable and Vibbert (1985), an issue evolves through five stages from potential, imminent, current, critical, to dormant statuses. The potential status is the stage where some start raising questions about potential problems or opportunities, while the imminent status begins when the issue is gaining support from others. At the current status, the issue has captured interest and has become a means of exchange. On the other hand, the critical status is the stage where action is demanded, whereas the dormant status occurs after the issue has been dealt with. As an issue moves from potential to critical stages, it becomes clearer and requires an immediate response. Down the line the senses about a particular issue will be adjusted and enriched, which will make an issue even more understandable. An issue needs to be manifested in a novel manner. A novel issue can trigger the audience’s attention, making it easier for a leader to secure participation. Louis and Sutton (1991), after reviewing various literatures, concluded that novelty is one factor that triggers a transition from “habits of mind to active thinking” in an individual’s cognitive process. Novelty accelerates discussions, and activates social interactions. An issue is perceived as novel when it exceeds the audience’s expectations. Finally, an issue can be characterized by the perceived strength of its impact on individuals and/or their performance. In some cases, issues are described as peripheral to the people or organizations involved, but well-articulated issues are those expressed in such a way as to convey significant meanings and perceived impacts. Issues closely related to the core of organizational operations, strategy and/or serious opportunities and threats will be the leader’s primary targets, but if their meanings and potential impacts are not properly articulated, packaged and shared with the associated audience, they may never draw the audience’s attention, reach the stage of implementation, nor engender any noticeable results. The charismatic leadership theory (Conger & Kanungo, 1987) suggests that a leader’s vision creates a sense of charisma among followers and influences their performance. However, it is not simply the vision itself that produces such results, but the perception of potential impact that the vision communicates in its contents.
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So it does not have to be a vision, but could be any issue that yields significant performance, as long as it is appropriately packaged and has an impact on teams, and organizations and individuals. Thus, it can be proposed that: Proposition 5. Issues that are challenging, receptive, clear, novel, and impactful will be more effective than those that are not. So far two dimensions of the leader’s issue creation behavior, i.e. sense-sharing and issue articulation, have been described. The last dimension is implementationdesigning, in which the leader designs or prepares to launch an issue in order to achieve the desired results. This dimension describes the issue leader’s decisions or resolution with regard to two important questions: (1) Whose endorsement and involvement should be sought; and (2) To whom should the issue implementation be delegated. These questions need to be carefully approached because leadership disappointments are often caused by a failure in obtaining the endorsement of audiences connected to a particular issue, or by not selecting and authorizing the right person(s) to carry out the issue implementation tasks. Some audiences may reject, or withdraw from endorsing, the issue proposed by a leader not because of its perceived low quality, but because they were not approached and consulted at the right time. In addition, deciding who will actually be involved in and take charge of each step of the implementation process (authorization and delegation) also draws the audience’s interest. Such role-sharing leads to their evaluations of the perceived fairness and righteousness in distribution of works, i.e. division of tasks and opportunities. When the division of labor is unbalanced amongst workers, it may be perceived that some carry out large jobs for nothing and others perform small tasks for rewards. Designing for endorsement includes behaviors associated with delineation and scrutinization of target audiences – the audiences the leader needs to attract to successfully implement an issue – and the development of approach strategies for each targeted audience. In other words, the leader and his/her direct audiences who have articulated an issue will define the target audiences and what attitudes they should have toward the proposed issue. In this case, the base audience delineation could be the lines of authority, expertise, task-relatedness and organizational influence. Those who stand in the line of authority for issue creators have expertise, skills or experiences related to the issue; partake in formally assigned tasks somehow connected to the issue; or are influential with the different layers of management – these people could be designated target audiences. The potential attitude of each target audience toward the articulated issue should be scrutinized and forecasted. This means separating audiences based on attitudes and the degree of support for a particular issue. Audience attitudes can be divided
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Fig. 2. Audience Types.
into five categories: active supporters, passive supporters, bystanders, opposers, and obstructers. The active and passive supporters are positive audiences, while bystanders are indifferent to the proposed issue. In contrast, opposers and obstructers are negative audience types. Different strategies should be used with each audience type. In general, however, strategies that lessen the opposition’s intensity need to be given priority over strategies that strengthen positive attitudes, because opposing opinions tend to multiply faster and are more important to issue implementation than the supporting ones (Fig. 2). Finally, designing for authorization and delegation requires the creation of judicial perceptions (Lind, 1995) among audience members with regard to the shares of work one must contribute to obtain desired results. This means reaching a consensus on “who takes what role” when pursuing the issue. The organization justice literature suggests that there are three facets of justice – procedure, distribution and interaction (Greenberg, 1987). Roles and tasks related to issue implementation should be distributed to the right persons, following the right procedures, and in a mutually respectful manner. In order for the issue leader to successfully implement an issue in the latter part of the process, building a social consensus in the planning stage is of critical importance. The consensus could be reached by satisfying the three dimensions of justice. Proposition 6. A leader’s issue-creating behavior will yield more effective outcomes when endorsements from audiences with varying attitudes are properly planned and organizational justice is achieved in distribution of issue-implementation tasks than when not. Thus far, we have discussed the mechanisms of issue-creating behavior – what the behavior means and how it works. It has been posited that issue-creating behavior is composed of three dimensions – sense-sharing, issue-articulation and implementation design. Now on to the second behavior revealed by an issue leader – audience-involving behavior. Audience-Involving Behavior An issue has been created and planned for implementation. Now it’s time for action. The leader will remain in constant contact with those who he/she thinks
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will help build support. Strategies of involvement that tackle negative audiences and reinforce the positive ones need to be implemented. What kinds of specific behaviors should we expect the leader to display when he/she attempts to transform the audience’s negative attitudes into positive ones, and to strengthen those attitudes already positive? Audience involvement as a process has three stages: researching the initial definitions of audience; turning planned strategies into action; and adjusting the results of involvement efforts. In the last stage, we defined each pocket of audience as positive, negative or indifferent, and suggested different strategies of involvement to develop each pocket. The first thing to do when carrying the strategies is to check out whether or not each audience is correctly defined. If it is not, the course of action needs to be amended. Then the leader will act to communicate, persuade, explain, and sell the issue at hand to each audience. The anticipated negative attitudes will be approached first, followed by the indifferent and the positive ones. As a result of this involvement effort, it will soon become clear who is for or against the proposed issue, and how much commitment each audience is expected to demonstrate. Based on these expectations, the leader’s involvement strategy should be adjusted for before the next round of issue selling. The three stages of the leader’s appeal process – checking, acting and adjusting will be repeated until some satisfying results are obtained. After a while, the leader’s efforts will be evaluated for success or failure. If judged a failure, the issue itself could be aborted or its implementation delayed. Several factors affect the success or failure of this audience-involvement process. These include the leader’s (or issue seller’s) trustworthiness or the audience’ trust in leader (Podsakoff, MacKenzie, Moorman & Fetter, 1990), the context of the audience-involvement process, and the validity of involvement strategies. Trust has been studied from various perspectives, including the interpersonal relationship between two parties (e.g. Mayer, Davis & Schoorman, 1995; Rotter, 1967), transaction cost economics (e.g. Chiles & McMackin, 1996), relational contracting in alliances (Jeffries & Reed, 2000), strategic decision-making (Korsgaard, Schweiger & Sapienza, 1995), virtual organizations (Kasper-Fuehrer & Ashkanasy, 2001), and organizational ethics (Hosmer, 1995). Mayer et al.’s (1995) approach to trust and trustworthiness appears most appropriate as a means of explaining our version of the leader-audience relationship. Mayer et al. (1995) defined trust as, “the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party.” In our context, this definition could be interpreted as the audience’s willingness to be vulnerable to the leader’s actions, in hopes that the leader will perform to the audience’s expectation. “Being vulnerable” in
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the above definition infers that there is something important to be lost. In other words, by making themselves vulnerable, the audience is willing to take risks. So the audience-involving process of issue leadership refers to the leader’s effort to convince the audience to take risks by participating in activities related to a particular issue. What factors, then, contribute to the formation of perception surrounding a leader’s trustworthiness? After a thorough review of the literature, Mayer et al. (1995) suggested that factors related to trustworthiness include ability, benevolence and integrity. Ability is defined as “skills, competencies, and characteristics that enable a leader to have influence within some specific domain.” Benevolence is “the extent to which a leader is believed to want to do good to the audience, aside from an egocentric profit motive.” It is the leader’s positive perception and behavioral orientation toward the audience. The leader will want to help the audience, though such a behavior is neither required nor extrinsically rewarded. Finally, integrity is defined as “the audience’s perception that the leader adheres to a set of principles that the audience finds acceptable.” In order for a leader to be perceived as a person of integrity, he/she needs to show equality between words and behavior, consistency with his/her past actions, credible communications with the audience, and a strong sense of justice. Hence the leader who is perceived to be trustworthy with regard to his/her ability, benevolence and integrity will be more likely to succeed in attempts to involve the audience in the focal issue. In addition, the context in which the involvement takes place also affects the effectiveness of a leader’s audience-involvement effort. Dutton and her colleagues (1997) describe factors contributing to context favorability and unfavorability in selling issues to top management. In an analysis of interview data, they identified four contextual factors that contribute favorably toward middle managers’ efforts at selling issues to top management. These include top management’s willingness to listen, supportiveness of the culture, competitive and economic pressures, and change in organization. On the other hand, factors of contextual unfavorability include fear of negative consequences, downsizing conditions, uncertainty and the culture’s level of conservatism. These factors, though useful and adaptable, may not directly apply to the current issue leadership context, because the issue-selling literature confines itself to middle managers’ selling issues to top management (i.e. upward influence). Issue leadership deals with relationships surrounding a focal leader (i.e. all around influence). The success and failure of a leader’s audience involvement effort will partly depend on the timing and circumstances in which the persuading, explaining, selling, promising, impressing, and emphasizing involvement efforts are actually exercised. In consideration of the contextual factors described by Dutton and her colleagues, we may conclude that factors such as personal characteristics of an
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involvement candidate (audience), cultural traits of an organization, and situational favorableness for interaction will influence whether or not a leader’s audience involvement efforts will succeed. Personal characteristics of a candidate audience include past experiences related to the suggested issue, proactive personality and attitudinal susceptibility. If the involvement candidate had positive experiences related to the issue at hand, he or she would be more likely to support the issue raised by the leader. Also, proactive and susceptible audiences show higher rates of acceptance when issues are suggested. Organizational culture is another contextual factor that determines the effectiveness of a leader’s influence efforts (Ashford et al., 1998). According to Hofstede (1980), culture is “the collective programming of the mind which distinguishes the members of one human group from another – interactive aggregate of common characteristics that influence a human group’s response to its environment” (p. 25). The way members (audience) respond to proposed issues depends on the way the minds of members of a collective are programmed. When the audience’s minds are geared toward openness and innovation, even challenging issues will be easily accepted. But if the characteristics of the culture are tilted toward conservatism or bureaucracy, even easy issues could be challenged. Additionally, in matching cultural types and innovation-championing strategies, Shane, Venkataraman and MacMillan (1995) propose that collectivism, power distance and uncertainty avoidance are somehow related to innovation-championing. Based on their argument, it could be posited that high collectivism, low power distance and low uncertainty avoidance tendency all make the issue leader’s involvement efforts much easier to accomplish. Also, situational favorableness for interaction will be key to the leader’s successful efforts in audience involvement. When a leader attempts to persuade a focal audience member to accept a proposed issue, that audience member may be in such a bad mood that he/she does not pay much attention to it. Small things, like the way the leader delivers an issue – voice tone, gestures, etc. – or the level of stress that the focal audience feels at that particular moment, or the amount of time allowed for persuasive interactions, will lead to creation of favorable or unfavorable conditions in the leader’s audience-involvement efforts. A clever leader should develop a common-sense approach for attracting the target audience to the proposed issue. The final factor that affects the audience-involvement process is the validity of involvement strategies. The issue leaders may develop specific strategies to pull audience members into the issue-implementation process as supporters. These strategies could be classified into two categories – affect-based strategies and cognition-based strategies. Affect-based involvement strategies represent the action leaders take with a focal audience, which primarily stress affective appeal
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to the audience members’ minds. Rather than laying out the pros and cons of adopting a particular issue, the leader may emphasize some salient aspects of the issue, or hold up certain causes and accountabilities associated with the proposed issue. Cognition-based strategies, by contrast, focus on personal gains that could be attained by joining the issue process with the leader. These strategies facilitate the leader’s approaching a focal audience with an analysis of the costs and benefits related to pursuing a suggested issue. Neither affect-based nor cognition-based strategy is valid in and of itself. The validity of involvement strategy should be judged in accordance with the context in which the strategy is executed. The leader may have to use different strategies to influence upward, lateral or downward audiences in an organization. The choice of involvement strategy should also take into consideration audience member’s biases, experiences, schemas and relational ties (Thomas & McDaniel, 1990). The innovation-championing literature provides ample evidence and reasons for various audiences’ resistance to new ideas (e.g. Shane et al., 1994). A leader’s exercise of pertinent involvement strategy is critical in overcoming the audience’s expected resistance. As demonstrated thus far, the audience-involving behavior has been characterized as a process of involvement through which the leader exercises his/her influence efforts. The process involves checking out the initial definitions of audience, turning planned strategies into action, and adjusting the results of involvement efforts to future attempts. In addition, factors that affect the involvement process have been explained. These include the leader’s trustworthiness, the context of involvement, and the validity of involvement strategy. When a leader successfully involves the essential audience, then he/she needs to implement the issue in order to get the results. Hence the following is proposed: Proposition 7. A leader’s audience-involvement behavior will become more effective when the leader is trustworthy, the involvement context is favorable, and the involvement strategy is valid than when not. Issue-Implementing Behavior Leaders who propose an issue and successfully involve critical audiences should take steps to implement the issue to achieve desired results. This issue leadership behavior is important because it is directly related to the success or failure of activities that relate to the development of subsequent issues. A leader’s issue-development activities should not be short-lived, but should result in continuous efforts or a change in lifestyle. At one particular point in time, an issue leader may tackle several issues in different stages of the issue life cycle. If not equipped with an efficient issue-implementation system, an issue leader may not be able to attain desired levels of performance.
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Issue-implementing behavior has four distinct behavioral facets: securing efficiency in issue-implementation system; maintaining and enhancing motivation and spirit of success amongst implementers; helping to overcome unexpected obstacles that block efficient implementation of an issue; and providing necessary feedback, and rewards and recognition for those constituents who have taken part in the implementation process. A leader should be cautious of each of these facets since negligence in any one of them will certainly lessen the chances of success in issue implementation. The first facet – efficiency of implementation system – means the extent to which structural and cultural factors of an organization enable or disable an issue leader to speedily put an intended issue into practice. A leader should be able to work in an environment where issues are reliably implemented as planned. Factors such as rules, norms, reward systems and organizational values may work for or against the implementation of an issue (Dutton et al., 1997). Thus, a leader’s proactive behavior is needed to find or establish a favorable system that dependably facilitates issue implementation (Russell & Russell, 1992). The innovation-championing literature describes specific examples that block the efficient implementation of new ideas in the midst of specialization, systems of authority, and routines (Shane et al., 1995). The issue leader should pay attention to these factors and be able to establish a means to overcome them when necessary. The second facet of a leader’s issue-implementing behavior involves maintenance and enhancement of motivation, and a spirit of success among implementers. Keeping motivation and spirit high is a core leadership factor suggested by many leadership theorists (e.g. Conger & Kanungo, 1987; Kouzes & Posner, 1987). At the earlier stage of issue creation, the issue leader develops an implementation plan in which implementation schedules and methods of work-sharing are determined. Then the leader puts them into practice, pulling together resources and manpower (i.e. those who take charge of implementation of an issue), declaring a formal launch of the focal issue, and encouraging people involved to share the spirit of success. Acquisition of necessary resources and manpower, and the launch declaration are activities accomplished during the first facet, while encouragement of success spirit is part of this second. In order to encourage or motivate issue implementers to share the spirit of success, the leader needs to create a sense of team potency or efficacy (Lindsley, Brass & Thomas, 1995) among audience members who take part in issueimplementation, and have them share a comparative standard of achievement as suggested in the control theory (Klein, 1989). Since the implementers’ initial high spirits oftentimes decline with the passage of time, the leader should develop programs aimed at keeping them high. The leader’s provision of unexpected rewards and recognition during the implementation process may encourage implementers to retain a sense of importance with regard to the task at hand.
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The third facet, overcoming obstacles confronted during the implementation process, derives from innovation-championing literature (Shane et al., 1995). It is not difficult to imagine that courses of action may deviate from what has been originally planned throughout the implementation process. Accidents happen. Some of those who declared support in earlier stages may change their mind when it comes to implementation. Sometimes promised resources don’t arrive in time, and at others the team member in charge of a particular work unit quits. The list of potential obstacles never ends. The leader, however, should be able to do what is necessary to get the job done whether or not those obstacles are anticipated (Shane et al., 1995, p. 935). Some measures need to be improvised, while others require preventative actions. The last facet involves the role of feedback, recognition and rewards in the issue-implementing process. The issue leader doesn’t have to wait until an issue is fully implemented before he/she takes action pertaining to these behaviors. The leader should provide these incentives to those who share implementation duties and to those directly or indirectly involved in the results-producing process. Exceeding the expectations of those involved is critical in effective provision of feedback, recognition and reward. In order to beat one’s expectations, the leader should master the timing and strength in effectively providing those three factors. The unexpected feedback, recognition, and rewards that are given will enhance issue implementers’ motivation. Proposition 8. A leader’s issue-implementation behavior will be more effective when the implementation system is efficiently organized, the implementors’ spirit of success and motivation is maintained, and the feedback, recognition and rewards are properly administered than when not. Thus far, we have discussed three core behaviors of issue leadership – issuecreating, audience-involving, and issue-implementing. Although these behaviors are critical in the issue leadership theory, a theory is incomplete unless it establishes the relationship between the core behaviors and other variables. To accomplish this we return to the Issue-Leadership Model that was depicted in Fig. 1. The model describes the relationships between issue leadership behavior and its antecedents, moderators and consequences.
ANTECEDENTS AND MODERATORS OF ISSUE LEADERSHIP BEHAVIOR Although most leadership theories assume that individuals are malleable and can be trained in a particular leadership style, some people are better than others at
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absorbing and expressing certain styles or behavior. Evidence explaining the link between individual differences and behavior can be found in organizational behavior literatures (e.g. Kanfer, Wanberg & Kantrowitz, 2001; Weiss & Adler, 1984). In the leadership literature, however, few studies have focused on the relationship between individual difference variables and leadership behavior. One exception was a recent study conducted by Chan and Drasgow (2001). They successfully tested the relationship between a leader’s inspiration to lead and the effectiveness of learning leadership behavior in training sessions. Other studies (e.g. Lord & Hall, 1992) have also dealt with personality-leadership linkages, but the results were not conclusive. In leadership literature, at least three studies (Chan & Drasgow, 2001; Kirkpatrick & Locke, 1991; Singer, 1991) dealt with the leadership motives. Kirkpatrick and Locke (1991) identified the leadership motive as a necessary trait for leaders, and Singer (1991) emphasized the importance of a leader’s motivation for leading others, which was measured with a single item. Chan and Drasgow (2001) dimensionalized “motivation to lead” into three factors – affective, non-calculative and social-normative motivations – and tested how the motivation-to-lead dimensions correlate with personalities. They found that the motivation to lead factors differentially relate to Big Five personalities. In any leadership context, the affective motivation or aspiration for leadership could most strongly relate to leadership behavior. A leader with a strong affective motivation to lead will be proactive in pursuing the creation of issues, audience involvement and issue implementation. So the motivation to lead is a concept that underlies all three dimensions of issue leadership. Issue leaders should maintain their own motivation for leadership throughout the leadership process, since loss of motivation at the midpoint will certainly result in the halt of ensuing issue-related activities. Proposition 9. Leaders who have strong motivation to lead will show better issue-leadership behaviors than those who are lacking in such motivation. In Fig. 1, we identified one important moderating variable – organizational culture – that provides situational conditions for the relationship between the antecedent variable (i.e. motivation to lead) and issue leadership behavior. Culture could be interpreted as a programmed set of responses to a particular situation or problem shared by a group of people. It involves the assumptions, values, beliefs and norms shared by people in a given set of boundaries. Culture is to society (or organizations) what memory is to individuals (Triandis, 1995). This collective memory or culture emerges as a result of interactions and exchanges among societal or organizational members. The typology of culture varies, depending on which aspect of culture is being dealt with at the time. The characteristics
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of organizational culture that an issue leader has been part of will determine how effectively predisposed leadership potential is released. As discussed in the audience-involvement section, the cultural dimensions that have conceptual links with issue leadership include collectivism, uncertainty avoidance and power distance. In addition, an innovation-oriented culture will more closely relate to issue-creating behavior, while a leader in a results-driven culture will feel more comfortable when exhibiting issue-implementing behavior. Thus, the following proposition is suggested: Proposition 10. The relationship between a leader’s motivation to lead and issue-leadership behavior will be moderated by the characteristics of organizational culture.
CRITERION VARIABLES OF ISSUE LEADERSHIP As mentioned at the beginning of this chapter, one limitation of existing leadership theories is their emphasis on “soft” performance qualities, such as satisfaction, commitment, and so forth. The issue leadership theory, however, focuses more on the hard qualities. Depending on the issue characteristics, issue leadership behavior may result in hard or visible issue outcomes, such as cost savings, quality improvements in services or products, better methods of production or management, new product or service development, the resolution of conflict, and problem-solving skills. It also results in an increased knowledge capital in organizations. An issue leader, for instance, may perceive potential problems in product quality and view this as a critical issue. As a result, he/she persuades and gathers relevant audiences involved in the product quality area, and implements improvement plans to obtain desired results. As a result of this issue leadership behavior, the leader and audiences achieve a higher quality product. As such, results that could be obtained through the issue leadership process are as diverse as the issues that are tackled. Although the issue leadership outcomes are diverse, depending upon what kind of issue a leader and audience tackle, a focal issue leader’s capabilities and trustworthiness will ultimately be evaluated by his/her audiences. The evaluation results are often termed “leadership effectiveness.” These perceptions on leadership effectiveness will influence the audience’s psychological readiness or commitment to the leader’s future issue proposal. The effectiveness evaluations will be directed toward the leader as a whole person or specific dimensions of issue leadership behaviors. For instance, a leader could be considered a person with excellent issue-tackling skills, or as a person with
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issue-creating and -implementing capabilities, but lacking in audience-involving competence. An issue leader should, therefore, be able to improve upon his/her weak points in order to perform better in the future. Proposition 11. Issue leadership behavior will result in high-performance issue outcomes and effective leadership evaluation. In reality, several issues challenge a leader’s attention at once. So it is important that the leader have the ability to deal with several issues in different life cycle stages and with distinctive characteristics in an effective manner. An issue leader needs to deal with more than one audience group simultaneously, which may require an added skill not described in previous sections. The outcomes of one issue could also be intermingled with those from another. Hence, an issue leader should attempt to maximize collective outcomes rather than sacrificing one over another.
IMPLICATIONS OF ISSUE LEADERSHIP THEORY TO GLOBAL BUSINESS SETTINGS Global business settings provide unique environments for leaders at least in two respects: (1) characteristics of audience; and (2) issue contents. Issue leaders have to work with the audiences who have value sets quite different from their own. What is considered right in a leader’s culture may be perceived as wrong by the audience. So the leader’s efforts or behaviors could be interpreted by the audience in the opposite of that expected. In addition, the global audience may have different expectations about a leader’s role. Yeung and Ready (1995), for example, compared relative significance of leadership competences perceived by managers and executives of global corporations from eight countries. The results showed significant differences in the managers’ rankings of leadership competencies. Korean managers view “the facilitator’s role in strategic change” as the number one leadership competency, while Japanese managers consider “delegation” to be the most important. American managers put “performance management” in the top position, whereas managers from France, Germany, Australia and Russia viewed a leader’s vision as the most important. These differences require extra efforts from leaders that deal with a global audience. Hofstede’s (1980) four cultural dimensions – individualism/collectivism, power distance, uncertainty avoidance, and masculinity/femininity – could also describe the characteristics of a global audience. American audiences, which are characterized as individualistic, low in power distance and uncertainty avoidance,
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and masculine, would prefer leaders to actively partner with audience members, to be specific and clear in their descriptions of performance-reward ties. In contrast, Korean audiences – collectivistic, high in power distance and uncertainty avoidance, and feminine – are likely to show preference for leaders who are respectable, self-sacrificing, and who give specific descriptions about each other’s role. Hofstede’s study was conducted in 1980. The cultural status of each nation may have shifted during that time. Thus, leaders in global business settings should take these cultural differences into consideration in order to achieve desired results. Leaders are expected to encounter unique issues in global business settings. Issues such as “how to deal with unfamiliar customers and cross-border suppliers,” “efficient ways to overcome the barriers imposed by local laws, regulations, or host-country politics,” and “methods to handle labor unions successfully,” require global leaders to be prepared with special mindsets and capabilities. In other words, acceptable management practices differ from country to country, imposing extraordinary stress upon leaders. Interpreting global business environments is also quite different from understanding domestic settings, thus further necessitating leaders to master savvy global competencies. Situational factors like the nature of investment in the host-country operation and the headquarter company’s human resource policy may also create contexts where leaders inevitably confine their behaviors to a limited domain. When the host-country operation is a multinational corporation’s wholly-owned subsidiary, the local managers may not have much discretionary power, and may find it difficult to practice the desired leadership behavior. Multinational corporations, however, differ in global human resource policies, while others do not. The multinational corporations that have globally-open human resource systems will provide managers and executives, whether they are local or expatriates, with more opportunities to grow as leaders in global business settings than those that do not. McCall and Hollenbeck (2002) described these complicated global business settings in two dimensions, i.e. business complexity and cultural complexity. All global works can be defined within these two dimensions. Some global works may exhibit complexity at the cultural level, but not at the business level. The global works that demonstrate high complexities in both business and cultural dimensions pose greater challenges than those in the global leadership role. These differences in business and cultural complexities provide some implications for issue leaders. Differences tend to create a barrier between a leader and the global audience about what is important and what is not. That is, a leader’s issue creation effort may not attract required attention from the focal audience. Those issues that a leader considers significant and meaningful may draw attention from only a limited audience, thus implying that a leader place
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more energy in involving or selling issues to the global audience. The cultural gap may also require an issue leader to spend more time and effort in this area. In addition, business and cultural complexities may deter an issue leader from implementing a selected issue in an efficient way. The issue leadership theory, however, provides leaders with the needed solutions to overcome those barriers. As described in previous sections, the issue leadership theory is very specific in explaining what to do in such complex situations. Issue leaders should proactively approach the global audience in order to make and share goals together. They are expected to create issues by anticipating potential problems or opportunities. Through the sense-sharing and issue-creating processes, issue leaders should be able to understand and/or untangle the business and cultural complexities and turn them into a field of opportunities. Building trust with the global audience and planning the implementation are part of the process. The issue leadership theory specifies ways to involve audiences, which could also apply to the global business environment. The global audience could be classified according to their positions on a proposed issue, and thereafter approached with culturally appropriate involvement strategies. In addition, one of the advantages of operating in a global arena is the fact that many more resources are available in global settings than in domestic settings, because resources may be transferred and utilized across borders. This makes issue implementation much easier to accomplish in a global business environment, enabling issue leaders to overcome barriers of issue implementation more effectively. In sum, the issue leadership theory is more appropriate than others in explaining desirable leadership behaviors in global business settings. Issues provide the means to attract and gather culturally different and geographically dispersed global audiences together under one umbrella. The specific steps prescribed by the issue leadership theory provide leaders with solutions that can achieve maximum results in global business settings. Hence the following proposition is made: Proposition 12. More effective outcomes will be obtained in global settings when a leader shows issue leadership behavior than when he/she does not.
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GLOBAL TALENTSHIP: TOWARD A DECISION SCIENCE CONNECTING TALENT TO GLOBAL STRATEGIC SUCCESS John W. Boudreau, Peter M. Ramstad and Peter J. Dowling ABSTRACT It is widely accepted that global competitive advantage frequently requires managing such complex situations where traditional organization and job structures are simply insufficient. Increasingly, in order to create a flexible and integrated set of decisions that balance local flexibility with global efficiency, organizations must rely on more social, informal and matrix-based shared visions among managers and employees. Research on global strategic advantage, global organizational structures and even shared mindsets has suggested that dimensions of culture, product and function provide a valuable organizing framework. However, typical decisions about organization structure, HRM practices and talent often remain framed at such a high level as to preclude their solution. We maintain that there is often no logical answer to such questions as, “Should the sales force be local or global?” or “Should product authority rest with the countries or the corporate center?” However, we propose that embedding business processes or value chains within a Culture and Product matrix provides the necessary analytic detail to reveal Advances in Global Leadership Advances in Global Leadership, Volume 3, 63–99 Copyright © 2003 by Elsevier Science Ltd. All rights of reproduction in any form reserved ISSN: 1535-1203/PII: S1535120302030046
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otherwise elusive solutions. Moreover, by linking this global process matrix to a model that bridges strategy and talent, it is possible to identify global “pivotal talent pools,” and to target organizational and human resource investments toward those talent areas that have the greatest impact on strategic advantage. We demonstrate the Value-Chain, Culture and Product (VCCP) matrix using several examples, and discuss future research and practical implications, particularly for leadership and leadership development.
INTRODUCTION The field of global human resource management (HRM) and strategy has advanced significantly in recent years. The increasing importance of human resources, or “talent” as we shall use the term here, has prompted most organization leaders not only to state that “people are our most important asset,” but also to take tangible strategic actions that embody that claim. While the vast majority of research and practice devoted to global human resource management has focused on the processes of expatriation and repatriation, and this has been quite valuable in enhancing these processes (see Dowling, Welch & Schuler, 1999), there is increasing attention on broader strategic issues and the need to incorporate, and even lead with, decisions about human resources as organizations strive to compete globally. Significant advances have been made in our understanding of the importance of human resources to global success, and the sophistication with which human resource practices and structures can be applied to global operations. Yet, there remains significant room for improvement. Despite the consistent recognition that effective human resource management requires a clear and tangible link between decisions about people and key global strategic success factors, current research continues to lament the inadequacy of existing HRM frameworks for providing such linkages (Novicevic & Harvey, 2001, p. 1260).
Global Success Depends on Informal Social Networks Future global strategic success may rest more on informal and less tangible social networks, the “mind matrix,” which involves the internalization of control by cadres of socialized managers, to replace the rigidity and expense of external structural control. As Engle, Mendenhall, Powers and Stedham (2001, p. 348) note, “This mind matrix control, a form of ‘social’ as opposed to ‘bureaucratic’ control, appears well suited to more nimbly carry out the locally responsive, yet globally
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directed transnational strategy” (Adler & Ghadar, 1992; Engle & Stedham, 1998; Ouchi, 1981). Even the most detailed organization designs, supported by the most elegant and sophisticated human resource practices, are unlikely to be fully effective without frameworks and tools to promote this shared strategic understanding. Dowling et al. (1999) noted that increasingly informal control mechanisms will move “beyond the matrix” where authority and coordination are no longer embedded cleanly within structure, but instead are shared and shifted between “corporate centers” and “nodal units” in regions or key product areas. They suggested several human resource practices to develop global competencies and experiences that support a network of leaders who share a common strategic understanding about the organization’s success. This poses a significant dilemma for global organizations, and for the human resource management profession that supports them. Advances in formal organizational design and global human resource practices are important. Yet, a significant future challenge for global organizations will be to develop and enhance their ability to informally but tangibly link the elements of their people – what we call “talent” – to the key elements of their global strategies. As organizations rely more on informal and shared philosophies, and understanding about strategic goals and resources, the “glue” that holds them together will increasingly be embedded in the array of decisions about talent, rather than in rules, hierarchies, human resource practices or job descriptions. Yet, the dominant models of global HRM continue to focus on improving human resource management HRM practices applied to the global workforce, albeit with increasing attention to the nuances of country, culture and local market variations (e.g. Bloom, Milkovich & Mitra, 2002; Dowling et al., 1999).
HRM Focuses on Formal Structures, Services and Practices Traditionally, HRM relies on activities such as global staffing, global task forces and oversight committees (Taylor & Beechler, 1993), supplemented by key HRM activities in areas such as remuneration, labor relations, training, communications, etc., as ways to develop the soft structures within global organizations that function both as informal control devices and as coordinating inducers of subsidiary collaboration and competition. Yet these technologies are ultimately the means to a much larger end – to maintain a differentiated fit in managing the decentralized global firm (Bartlett & Ghoshal, 1995). Dowling et al. (1999, p. 50) cite five dimensions of these new structures: “delegation of decision-making authority to appropriate units and levels; geographical dispersal of key functions across units
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in different countries; de-layering of organizational levels; de-bureaucratization of formal procedures; and differentiation of work, responsibility, and authority across the networked subsidiaries.” Not only do traditional HRM frameworks overemphasize formal structures and programs, but human issues generally, and HRM particularly, remain tangential considerations in global strategic decisions. For example, Novicevic and Harvey (2001, p. 1260) noted that: (1) the traditional area of technical and administrative responsibility for the human resource management function appears to be too narrow to influence the firm-level strategic decisions (Baron & Kreps, 1999); (2) the typical argument for HR effectiveness lacks both formal and practical legitimacy, so HR is perceived as marginal and merely derivative of the corporate strategy (Galang et al., 1999); (3) HR managers are usually isolated from major global strategic decisions, unless some industrial relations-specific issue, such as union contract negotiation/administration, is involved (Schuler, 1989); (4) in comprehensive corporate changes, such as cross-border mergers and acquisitions, the IHRM-related strategic decisions are made post hoc (Jennings, 1994); and (5) international HRM issues, even when strategic, are considered by top management only in strategy implementation, not strategy formulation, and only within a narrow scope of country-specific employment, such as difficult bargaining situations or major layoffs (Russ et al., 1998).
The Need for a Decision Science for Talent To remedy this situation, we propose that in addition to improving the application of organization design tools and HRM activities, we must fully develop a “decision science” for global talent. As we will discuss, a decision science focuses on “improving organizational strategic success through decisions that impact or depend on talent, wherever they are made” (Boudreau & Ramstad, 2003). We call this decision science “Talentship.” While the traditional focus on HRM programs and activities, organizational designs, and service delivery to partners are and will remain important, it is increasingly the amalgam of decisions, and the informal and formal cognitive frameworks that support them, that create the “mind matrix” and “strategic philosophy and vision” that underlie the informal social networks so essential to future global success. For example, Hitt, Keats and Yucel (this volume) show that trust is a key component of such informal networks, both within and outside the organization. They suggest, “when trust exists in the team, individual team members are willing to think creatively, express new and different ideas and to take risks, in general.” We propose that risk taking and sharing are enhanced by
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a shared decision logic, particularly regarding talent. Individual organizational members make decisions about whether and how to apply their personal talents, in part based on trust, and trust can be enhanced by shared mental models. If future global success rests on organization structures that are more informal, social, tacit and free of rules and bureaucracy, then what elements will substitute for the traditional organizing mechanisms of formal organization structure, HRM practices, control systems, and job-based frameworks for measuring, rewarding and assessing organizational talent? Financial and marketing systems, though certainly not immune to abuse, create very powerful systems of informal authority. We have argued (Boudreau & Ramstad, 1997, 2002, 2003) that these more mature decision support systems accomplish their effects largely by enhancing the thousands of individual decisions about financial or customer capital, made everyday throughout the organization. The measures of accounting and sales are quite tangible, but the success of Finance and Marketing as decision frameworks rests on a common “point of view” and shared “language” for understanding how key resources contribute to competitive advantage. As Boudreau and Ramstad (2003) noted, Marketing evolved as a decision science from the professional practice of sales. Finance evolved as a decision science from the professional practice of accounting . . . it is the science of Finance that applies portfolio theory to [accounting] numbers, to support decisions about the appropriate mix of financial instruments to optimize risk and return for an organization, and the appropriate deployment of financial capital to investments. Similarly, the sales process generates important data . . . it is the science of Marketing that developed and applies the theory of customer segmentation and product life-cycles to support decisions about advertising, product placement, etc. Finance is the decision science that improves organizational performance by enhancing decisions about financial capital. Marketing is the decision science that improves organizational performance by enhancing decisions about customer capital.
As powerful as Marketing and Finance may be, they are myopic with regard to talent decisions. Yet, emerging organizational models suggest that future global organizations must increasingly rely on just this sort of shared framework for global talent. How will such competencies be detected, measured, articulated and enhanced? How will some sort of consistent vision and philosophy be maintained? What “common language” will underlie the myriad informal organizational and social ties that will drive this new system? We believe that these essential elements will emerge through a decision science for talent. Talentship is both essential and embryonic, as we see if we examine the current state of international HRM. For example, the concept of “global mindset” has long been a staple of international strategy and HRM discussions, yet has remained largely undefined and unmeasured (Hollenbeck, 2001, p. 41). We propose that a global mindset is embodied in the pattern of decisions, and the cognitive frameworks that support
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them. Indeed, we would argue that the purpose of global strategic HRM frameworks is to guide such decisions about the practice and research of globalization. Thus, understanding, articulating, measuring and enhancing global decision frameworks is fundamental to advancing global strategic HRM and leadership. Global leadership relies, in part, on creating a “teachable point of view” (Tichy & Cohen, 1997). Regarding talent, this requires that leaders communicate this point of view to enhance global decisions. Hollenbeck (2001, p. 35) noted that leadership development must include “communicative learning” – what others mean and making ourselves understood. Conger and Benjamin (2000, p. 170) noted that “collective dialogue” across levels and functions builds a common understanding of a firm’s vision. Every global leadership development system imparts a shared framework for understanding and communicating how financial and customer resources connect to global strategic competitiveness (e.g. Conger & Benjamin, 2000, pp. 156 and 214). Yet it is rare to find leadership development programs that impart such well-developed and shared frameworks to guide leaders’ thinking about how talent connects to global competitiveness. As a result, organizational strategies tend to have clearer connections and implications for financial and customer capital than for human capital, in part because the decision sciences of finance and marketing are so well-developed and understood by a wide array of leaders. If HRM is to evolve beyond the tangential role described previously, then this decision science must not only articulate the talent-strategy connection, it must also guide the deployment of HRM practices and investments, and articulate their effect on global competitiveness. A framework that articulates these connections is essential for the reliable networks and social systems that will be the hallmark of successful future global organizations. In this chapter, we will develop and illustrate such a framework, and demonstrate its application and implications for future global leadership and HRM practice and research. We make no claim to present a fully-formed decision science here. Indeed, our purpose is to motivate and encourage scholars, consultants and managers of international HRM to take up the challenge of building on these ideas to develop such a decision science.
THE HC BRIDGE™ STRATEGIC HUMAN CAPITAL FRAMEWORK1 An increasingly common theme in strategic human resource management research is the need to reveal what is within the “black box” between HR practices and strategic organizational outcomes (e.g. Becker & Gerhart, 1996; Chadwick & Capelli, 1998; Dyer & Shafer, 1998; McMahan, Virick & Wright, 1999). Inspired
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by tantalizing evidence that HR practices associated with firm-level financial outcomes, researchers have begun to insert selected intervening variables into studies of this relationship (e.g. attitudes, turnover, etc.). We propose that global strategic and HR management must go to the next step – to move beyond simply acknowledging the “black box” and instead to articulate and test a rich and detailed framework of linking elements. In essence, it is time to move from “black box” to a bridge. As we have seen, the lessons obtained from disciplines such as Marketing and Finance suggest the importance and power of such frameworks for advancing theory-building, measurement and management influence. We must develop a decision science that specifies a rich and logical set of connections between talent and strategic success.2 Figure 1 contains the model we have proposed to articulate organizational or business unit strategies tangibly enough to connect them to human capital and human resource investments. Some of these links have been proposed before (e.g. Becker & Huselid, 1992; Boudreau, 1998; Boudreau & Ramstad, 1997; Cascio, 1996; Fitz-enz, 2000). A more detailed application of the HC BRidge framework to the strategic challenges of the Internet can be found in Boudreau, Dunford and Ramstad (2001). Here, we concentrate on the three major anchor points of the framework. “Impact” identifies how elements of strategic success (e.g. uniqueness, growth, profitability) link with talent pools and structures. We use the term talent pools, rather than jobs, to focus on contribution rather than administration.
Fig. 1. HC BRidge™ Framework.
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This is consistent with the increasing call among global HRM scholars to move beyond traditional job-based systems emphasizing command and control (Engle, Mendenhall, Powers & Stedham, 2001; Novicevic & Harvey, 2001). We use the term ‘structures’ to refer to formal and informal patterns of authority, communication and information flows. For example, in entering an emerging country, a talent pool would include those who affect relations with the host-country government or other public authorities. Certainly, the job of the government contract negotiator would be a part of this talent pool, but it would comprise elements of other roles that affect such relationships, including lobbyists, top managers who interact with government representatives, and even employees in the local operations who may interact with local representatives of the government authority. “Effectiveness” connects HR policies and practices to talent pools and structures. This anchor point encompasses the impact of HR policies and practices on ability, attitudes and motivation, which are sub-elements of “Human Capacity” in Fig. 1. However, it also articulates whether and how that capacity produces aligned actions that contribute to the effectiveness of the talent pools and structures. “Efficiency” links the HR investments to the resulting HR policies and practices and I/O interventions. As noted above, many traditional HRM organizations concentrate primarily on efficiency, as when calculating the costs of expatriation, and the potential wasted resources when expatriates fail or leave the company soon after completing their assignment. Efficiency must be embedded within the context of impact and effectiveness to avoid misinterpretation.
APPLICATION OF THE HC BRIDGE FRAMEWORK: LINCOLN ELECTRIC’S HARSH LESSONS FROM INTERNATIONAL EXPANSION The value of the HC BRidge framework can be seen most readily in its application, so we will apply it to a recent Harvard Business Review case (Hastings, 1999) involving Lincoln Electric’s expensive, and nearly disastrous, attempts to expand into international markets, and the lessons learned by the CEO, Donald F. Hastings. Less than one hour after becoming CEO in 1992, Mr. Hastings was informed that massive losses in international operations would force the company to report its first consolidated negative net profit in its the 97-year history. As the case describes, these losses would worsen over the next two years, as the company struggled to correct the effects of poor past decisions. There were many reasons behind the mistakes of Lincoln Electric, but we will argue here that the lack of a decision framework for talent was a key contributor. Examining the case through the lens of the HC BRidge framework reveals how
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such a decision framework might tangibly improve such strategic decisions. We will highlight several key features of the framework and the lessons they suggest for the case.
Lesson No. 1: Avoid Using Non-Talent Decision Frameworks for Strategic Talent Decisions Organizational strategists routinely define strategic success and competitive advantage, and the business processes and key resources necessary to achieve it (refer to the top two boxes in Fig. 1), with very clear connections to financial, marketing and production resources. Yet, such strategies are often woefully disconnected and non-specific about people. Lacking a talent decision framework, global leaders are left to rely on the decision models they have at their disposal, and such models generally reflect disciplines such as accounting, marketing, engineering or the law – often within only one national or cultural context. We see this vividly in the case of Lincoln Electric. The company’s international expansion was driven by classic accounting logic, based on their U.S. successes: “We believed that because we were so successful in the United States, we could be successful anywhere. In fact, when we examined the manufacturing operations of the foreign companies on our acquisition list, we saw tremendous opportunities to reduce costs by applying our manufacturing expertise, equipment, and incentive system.” As is typical in many U.S. companies, the CEO, Mr. George E. “Ted” Willis, had widespread decision discretion and was largely unchallenged by a board of directors that was also U.S.-based, and comprised largely of current and former Lincoln Electric executives. Mr. Willis became Chairman and CEO with a well-developed decision framework based on his own historical career path – manufacturing engineering: Ted looked at the situation primarily from a manufacturing standpoint. He was a brilliant engineer and manufacturing executive. All four of my predecessors as Lincoln’s chairman had engineering and manufacturing backgrounds, and all four were of the firm belief that if you had the lowest-cost, highest-quality manufacturing operation, you would automatically dominate the market. (Hastings, 1999, p. 168).
The leaders at Lincoln Electric, and most other organizations, can hardly be blamed for their myopia about talent. They had simply not been presented with a framework for connecting talent with their organizational and strategic imperatives. This has implications for several emerging issues in international HRM strategy and leadership. For example, a dominant position in large home-country markets can actually reduce organizations’ ability to operate effectively in a global
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context (Dowling et al., 1999, p. 11). A large home-country market can provide a formidable platform for initial growth, but it can also lead top managers to adopt decision rules and frameworks that reflect only that market (Galbraith, 2000, p. 24). Similarly, it has been noted (Hanson, Dowling, Hitt, Ireland & Hoskisson, 2000, pp. 361–363) that in many non-U.S. organizations, the roles of Chairman and CEO are held by different individuals, while in the U.S. these roles are often held by the same person. Non-U.S. boards of directors are frequently more diverse, have more outsiders and more likely to challenge the CEO. Bebchuk, Fried and Walker (2002) compared the remuneration arrangements between U.S. and non-U.S. companies, noting that U.S. CEO’s are paid considerably more than their non-U.S. counterparts. However, the U.S. versus non-U.S. pay difference is much smaller for lower-level managers. They suggested that non-U.S. CEOs may have less power, because their firms often have more concentrated and powerful shareowners. How might we study the effects of these differences on global leaders? We propose using the pattern of decisions, and the cognitive frameworks that support them. Particularly with respect to global talent, where decision frameworks are more embryonic, we would expect that future research might benefit from encouraging key decisionmakers to better articulate their internal decision frameworks, perhaps using a model like Fig. 1.
Lesson No. 2: Use Business Processes and Value Chains to Make Strategy Explicit The second element of the HC BRidge framework (Fig. 1) is “Resources and Processes.” These are the transformation processes that comprise the ways that an organization creates value (Porter, 1985, 1996). For example, a generic value-chain of such processes might include procurement, manufacturing, packaging, sales, distribution and service, supported by processes such as information systems, legal and HR. Business processes have been used to identify the impact of knowledge in global firms (Boudreau, in press). Global value chains or “commodity chains” are also used as an organizing framework for understanding multinational and global strategies and industrial relations in a variety of industries (Frenkel, 2001; Gereffi, 1994, 1999, 2001; Gereffi & Korzeniewicz, 1994; Wilkinson, 2001). Such a perspective provides a potent alternative to concentrating merely on countries or products. For example, it is possible to analyze the global effects of shifts from producer-driven chains to buyer-driven chains, with an associated change in the processes that make the most difference in strategic advantage.
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Moreover, value chains integrate the external perspective on strategic advantage – assessing industry and competitor factors where competitive advantage can be created, with the internal perspective – a “resource-based” view that identifies the organization resources from which competitive advantage can be created. The term ‘Resources’ in the HC BRidge model (Fig. 1) reflects this integration. For example, Porter (1986) noted the importance of industry differences in determining the appropriate pattern and structure of coordination, control and delegation. He distinguished between multi-domestic industries and global industries. Firms in multi-domestic industries may pursue a combination of relatively separate domestic strategies, because competition in each country is independent from others. Conversely, in global industries, strategies require greater coordination because the competitive position in one country significantly affects the competitive position in others. What are the implications for talent decisions? Value chain processes and strategic resources provide the analytical detail or granularity to identify possibilities that enterprise-level strategies often obscure. For example, must all talent areas be coordinated in a global enterprise, while none need coordination in multi-domestic firms? At the enterprise level, such questions are virtually unsolvable, but they become much more tractable when we focus on processes. Consider the retail household consumer goods industry, epitomized by Wal-Mart. Traditionally, this was a classic example of a multi-domestic industry in which country or region-specific competencies, HRM policies and talent decisions supported localized competitive strategies. In some processes in the value-chain, such as advertising, this still holds true. However, Wal-Mart revolutionized the industry by recognizing the cost-cutting potential of sophisticated logistics and inventory systems, integrated with databases to track and predict customers’ buying behaviors. Thus, in the supply-chain and logistics processes of the value-chain, Wal-Mart creates global competitive advantage by integrating across regions and countries. Coordinated global talent and globally sophisticated leadership are far more critical in these areas than in processes that are more local, such as advertising. The petrochemical industry is similar, as globally integrated production and refining processes of the value chain support retail processes that are multi-domestic. Leaders must appreciate these distinctions, and effectively translate them into decisions about talent. Boudreau and Ramstad (1997, 2002, 2003) showed that improving business processes that represent constraints or bottlenecks, will most enhance the entire value chain. It is at these important bottlenecks that talent is most likely to have its greatest strategic effect. The case of Lincoln Electric vividly shows value of explicitly connecting talent decisions to business processes and value chains. We noted earlier the former
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CEO’s tendency to make decisions based on a manufacturing and engineering mind-set. As the new CEO noted (Hastings, 1999, p. 168): Having a stellar manufacturing operation and a good product is a wonderful advantage. But if you don’t have proper distribution, competitive delivery times, relationships in the marketplace, and people who can understand and help customers, you won’t succeed.
The new CEO realized that global competitive advantage was limited in many non-manufacturing areas of Lincoln Electric’s value chain, often revealing untested assumptions that prevented achieving competitive advantage. For example (Hastings, 1999, p. 174), Traditionally, exhibitors had used the eight-day [trade] show [in Essen Germany] as a venue for entertaining customers . . . not for making sales. . . . I saw the show as a sales opportunity. . . . We flew over three planeloads of our products from the United States and set an objective of selling 1,200 packages of semiautomatic welding equipment. We sold 1,762. By testing the conventional wisdom, we discovered that excellent American-made products would sell in Germany.
The importance of understanding bottlenecks, and emphasizing talent and leadership at those bottlenecks, is revealed in Hastings’ comment. “We started asking the veterans in the bottleneck areas to work the holidays and postpone their vacations” (p. 174). Thus, the new CEO instinctively analyzed global operations in terms of value chains, key processes and bottlenecks. In retrospect, this may seem quite obvious, but the tendency to overlook it is illustrated by the failure of Lincoln Electric’s former CEO to do so, and by the typical blind spots that result from decisionmakers’ habitual use of decision frameworks based on a home-country market or a particular functional discipline.
Lesson No. 3: Talent Pools are a Key Connecting Point Between Strategy and HRM Figure 1 shows that “Talent Pools and Structures” are a significant connection point between the elements of strategy (Sustainable Strategic Success and Resources and Processes) and the elements of more traditional HRM (Aligned Actions, Human Capacity, HRM Policies and Practices and HRM investments). It is not unusual for HRM decisionmakers to devise elaborate plans for HRM activities, and to judge their effectiveness through changes in human capacity and behaviors. However, such approaches often fail to ensure that the talent pools targeted by these programs are actually the most critical talent areas for strategic success. Traditional HRM asks the question, “Are our programs having an effect on the talent they target?” Decision-based HRM would ask, “Are our investments aimed at the talent areas
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that are most critical to the strategic success of the organization?” This question should be asked before designing organizations or implementing HRM practices, rather than the typical approach, where talent pool impact is addressed only as part of HRM evaluation, after a practice is already in place (Boudreau & Ramstad, 2002, 2003). We will return to this point, as it has significant implications for leadership development. In the HC BRidge framework, Talent Pools and Structures are defined by their impact on business processes and resources, rather than by their administrative job titles. Talent pools frequently represent combinations of elements of several jobs, which can help leaders avoid the limits of more-typical job-based approaches to global HRM (Engle et al., 2001). At Lincoln Electric, the original rationale for global expansion was to cut costs in non-U.S. manufacturing operations, and the perceived need to manufacture in other countries in order to sell there. Yet, upon further analysis, it became apparent that the availability of manufacturing capacity in other countries was not a prerequisite to foreign sales, and that U.S. manufacturing capacity was not the limiting value-chain process. Rather, the key limits were in sales and capital-acquisition. This had immense implications regarding what talent pools were actually most pivotal to future strategic success. At Lincoln Electric, the capital-acquisition constraint was translated into talent this way: “In October we brought in Orin Shaeffer . . . who had international financial experience, worked with J. P. Morgan to put together a ten-bank consortium . . .” (p. 173). The constraint on U.S. sales was solved by turning to a different talent pool: “We then brought in our 35 district sales managers. We told them we expected them to come up with ideas and promotions that would sell the products we were gearing up to make” (p. 173). The principle that pivotal talent pools are defined more by their effect on key processes than by job titles is illustrated by the impact of public relations on strategic success at Lincoln Electric (p. 177): Dick Sabo, director of public relations, parlayed this interest into a series of television specials, including a favorable 60 Minutes segment. Such recognition introduced Lincoln’s products to the general public and helped raise the top line.
Finally, the importance of the “Structures” element of the HC BRidge framework is vividly illustrated by communication structures that give voice to the views of regular employees, beyond “strategic planners” and “top leadership.” According to the Lincoln Electric CEO (p. 178): “We had ignored the loud and widespread expressions of concern from employees who saw our foreign expansion as a highly risky adventure. We had been na¨ıve to think that Lincoln could become a global company with Lincoln’s limited management resources.”
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The lessons of Lincoln Electric show the effectiveness of a leader who instinctively made decisions that identified pivotal talent through its connection to key business processes. The critical question for international HRM is how to reliably and consistently instill such decision rigor throughout organizations. True advances in global HR strategy cannot be left to the random possibility that a few organizational leaders will make these linkages by instinct. As the Lincoln Electric example shows, traditional career paths, dominant decision models such as finance and accounting, and existing strategic planning and HRM systems present formidable barriers to developing leaders capable of making these connections. Global HRM leaders must strive to develop, communicate and use a more robust decision framework that explicitly links talent to strategic success if we hope to analyze, understand and enhance the “mind matrix” (Bartlett & Ghoshal, 1993; Engle et al., 2001; Jones, 1998) that underlies key strategic decisions. Day (2001, pp. 563–564) distinguishes leader development, which builds human capital in the form of individual-level skills and behaviors; versus leadership development, which builds social capital that creates a collective organizational capacity to engage in leadership roles. Enhancing the logic about how talent connects to global strategy can contribute to both leader and leadership development, but may have its greatest effect on leadership, because social capital and collective capacity are particularly enhanced through common language and logic. If the organization does not proactively develop and communicate a talent-strategy logic, the collective need for it may cause faulty and conflicting logics to emerge.
Lesson No. 4: The Decision Framework is also the Communications Framework It has long been noted that HRM can contribute to successful globalization through communications that encourage globally-aware decisions. Such communications must clearly and tangibly demonstrate how individuals and groups collectively contribute to global competitive advantage. The same frameworks that bridge talent and strategic success not only provide useful tools for enhancing key decisions; they also provide the basis for understanding and enhancing communication about those decisions. Global competition involves greater change and complexity, making consistent and integrated communication about talent decisions even more essential. A more articulate point of view about how talent contributes to organizational success will enable future researchers and practitioners to more effectively communicate the logic of their decisions, and increase employee capability, opportunity and motivation (the elements of “Human Capacity” in Fig. 1).
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Again, the Lincoln Electric example illustrates the power of this connection: Rumors had created anxiety and fear on the factory floor. We needed to give people an accurate picture of the company’s problems and let them know that we had a plan to fight back . . . Our executives explained the company’s situation and the action plan in small meetings with front-line employees . . . We made a video and gave people copies to take home to watch with their families (Hastings, 1999, p. 173).
Traditional leader development focuses on competencies such as communication, change catalyst and building bonds (Corace, 2001; Day, 2001; Hollenbeck, 2001; McCauley, Moxley & Van Velsor, 1998). Leaders must undoubtedly understand how to communicate and build commitment, but it is equally important to understand what to communicate, and to communicate why. Thus, the frameworks used to make talent decisions should be logical and clear enough to communicate those decisions to the larger organization.
Lesson No. 5: HRM Functional Effectiveness and Efficiency Must Arise from a Strategic Talent Connection Everyone agrees that HRM practices must integrate with and support the organization’s global strategy. This presumes a rich and detailed logic linking HRM practices with strategic outcomes, yet such logic remains largely elusive. Lacking such logic, global HRM professionals often find themselves exporting home-country practices, hoping that they will be successful, or modifying practices in response to local pressures that may or may not reflect key strategic variables. Typically, global HRM decisions attempt to maximize “Effectiveness” and “Efficiency” exclusively, with far less attention on “Impact” (refer to Fig. 1). Dowling et al. (1999, p. 12) noted that the “emic-etic distinction” has been a fundamental dilemma in global strategy and HRM for decades (e.g. Berry, 1980; Teagarden & von Glinow, 1997), with emic describing culture-specific elements and etic describing culture-common elements. The distinction remains important today, where significant debate continues over questions such as whether selection systems, compensation systems, training or labor relations should be consistently applied globally or modified in response to specific requests or pressures with regions or countries. We believe that many of these debates may be unsolvable when framed in this manner, but solutions are often revealed at a more granular or detailed level, by carefully examining what HRM investments will enhance the key talent pools, which in turn support the most constrained business processes, that are key to country-specific and global strategic advantage.
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Lincoln Electric’s success in the U.S. was built on their incentive pay system which constituted over 50% of U.S. employees’ annual incomes. The initial logic for global expansion was in part to acquire and streamline European manufacturing plants, whose costs were higher than Lincoln’s U.S. plants. A talent-based decision framework would have revealed the importance of the incentive system to this strategic goal. However, the applicability of the incentive system was never even tested. Indeed, over a year after acquiring German manufacturing facilities, the incentive system had not even been implemented. The new CEO concluded that cultural and labor-market differences between the U.S. and Germany were too great to allow the incentives to work effectively, and the acquired German plants were later sold. A better approach would be first to determine which talent pools were most pivotal, in which regions or countries, and in what key processes. Then, armed with that knowledge, identify in advance the promising combinations of talent, culture and business processes where the incentive system might have a high payoff, and where it would not. Simply looking at U.S. versus Europe cost structures applied a cost accounting model to a talent decision, with characteristically poor results. The Lincoln Electric example is all too familiar. Most organizations suffer from global strategies and decision models that do not connect to talent. This can produce ethnocentric perspectives that are particularly dysfunctional, because talent, even more than capital, machinery and other resources, reflects important culture-specific differences. Is this simply the inevitable result of poor leadership and strategic planning? We believe the answer is not that simple. Even the best leaders and strategists lack a consistent decision science, providing a language and point of view that connects their global strategic aspirations to tangible decisions about talent and HRM practices. Is it any wonder that they use traditional, if myopic, decision frameworks for talent decisions?
A PROCESS-FOCUSED FRAMEWORK FOR TALENT The Lincoln Electric example illustrates the value of a framework like HC BRidge in Fig. 1, which explicates the connections between HRM, talent and strategic success. In a global environment, this a good foundation, but it becomes even more useful when this connection logic is embedded within the critical dimensions on which global organizations must achieve balance and coordination. We now extend the framework to combine the talent-process connections of Fig. 1 with key global dimensions of Culture and Product.
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Beyond Job-Based HRM Systems Increasingly, achieving strategic success through talent will require balancing an in-depth local understanding with the orchestration of global capabilities and resources (Ghoshal & Bartlett, 1997), moving beyond traditional HRM tools that emphasize organizational design, job descriptions and the global application of “best” human resource practices. For example, Engle et al. (2001, p. 346) stated, Multinational strategies employ organizational design and structure as the primary control devices to implement the strategy, and advocate the use of job-based IHR practices to support structural controls. In transnational strategies, however, these roles are reversed and personal competency-based IHR processes and practices become the dominant control devices in support of a more nimble ‘mind matrix,’ while jobs and structure act in secondary support roles (Adler & Ghadar, 1992; Bartlett & Ghoshal, 1993; Engle & Stedham, 1998).
Global HRM strategy researchers have long argued for a focus on competencies rather than jobs, and a focus on process rather than structure (e.g. Ghoshal & Bartlett, 1997). Hofmeister and Parker (this volume) also state that “structure is a much-ballyhooed solution to organization management that has as much destructive as constructive value.” So, we must move beyond traditional job-based HRM systems, but to what alternative? As Fig. 1 suggests, the Talent-Process connection offers intriguing possibilities.
The Value-Chain, Culture and Product (VCCP) Matrix Global organization structure and strategy is customarily conceived along three dimensions. Galbraith (2000) discussed business, geography and function. Hollenbeck (2001, p. 18) noted the pervasive “triple matrix,” and how difficult it is to understand let alone manage within. Engle et al. (2001) proposed a three-plane cube defining several transnational competencies: Function, where breadth is how many functional areas one’s performance must span, and depth is how much detail within any function one must master; Culture, where breadth is how much one must span cultures different from his own and depth is in how much detail one must work within the new culture; and Product, where breadth is the number of products one’s performance must span and depth is the level of detail within any one product one must master. We will use these dimensions as a departure point, to illustrate how the elements in Fig. 1, particularly the Impact elements, might be enhanced to contribute toward a global decision framework for talent.
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“Function” is Defined by the Value Chain The “function” concept or the “traditional arrangement of work design . . . for example . . . accounting, marketing, finance and production . . .” (Engle et al., 2001, p. 349) is captured in the concept of value-chains and business processes and structures introduced earlier. Thus, in our framework, functions such as marketing, production and finance and R&D are conceived as elements of the organizational value-chain, as either direct transformations or support processes, all of which combine into informal and formal organization structures, to create sustainable competitive advantage. This has the advantage of recognizing the interrelationships between such processes, as well as the advantage of providing the flexibility to consider individual processes at more refined levels of detail. For example, “production” may include sub-processes such as total quality, mass customization and flexible manufacturing. Galbraith (2000) also relied on a process logic to describe global organizing strategies. He discussed methods of internationalization (export, joint venture, foreign operation, etc.) in terms of the processes that are exported or localized (e.g. distribution, production, product development, etc.). Galbraith also noted that one task of a geographic division is to “localize the success formula” of the parent company (p. 73), or to build international organizational capabilities such as product design (p. 76). We would suggest that success formulas and capabilities like product design are often best understood as processes within the value chain. Hofmeister and Parker (this volume) noted, “Critical organization processes include governance, financial management, talent and organization management, order to customer delivery, supply management, strategy and business planning, operations support, and technology and research” and warn that, “too often in the name of speed, spontaneity or tactical decision, process management is ignored in the interests of immediacy.” Figure 2 depicts a generic value chain, containing transformational processes that include Innovation, Operations, Sales and Service. Similar value chains were
Fig. 2. Generic Value Chain.
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Fig. 3. Process-Focused Global Strategy Model.
used by Kaplan and Norton (1996) and Porter (1996). Porter notes that the transformation processes shown in Fig. 2 are often accompanied by support processes such as human resources, information technology, finance, etc. For our purposes, the simpler value chain diagram will suffice, but the framework can be extended to add support processes. Next, we embed the value-chain concept within the dimensions of Product and Culture, as shown in Fig. 3. Global enterprises may have multiple Product categories or dimensions, and any one or combination of these product elements may be produced, sold or otherwise affected by any of multiple Culture categories or dimensions. Thus, each cell of the matrix shown in Fig. 3 represents the intersection or combination of one Culture category or dimension and one Product category or dimension. Within each cell is a value-chain of processes. The concepts of Product and Culture are preserved, but acknowledging their combinations and integration with the value chain provides new insights. The “Product” Dimension The Product axis in Fig. 3 might reflect specific brands, product lines, customer segments, or product/service categories (e.g. consumer goods, services, wholesale/retail, etc.). It might also reflect product/service features (such as speed or quality), particularly features such as customization that significantly define global competitive success, or that are particularly challenging to coordinate globally.
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Galbraith (2000, pp. 20–23) suggested that the diversity of the business portfolio on the Product dimension might be defined not only in terms of the number of products, but in terms of the number of business logics. Nestle has many products that fall under a related business logic, while GE has several business logics. GE Power generation, motors, locomotives, jet engines and medical electronics are one logic, sharing commercial customers, significant after-sale service, similar technology and R&D. Other GE businesses such as NBC broadcasting and GE Capital have quite different business logics. Proctor & Gamble’s (P&G) sales strategy (The Economist, May 11, 2002) provides a creative way to define categories in the Product dimension. P&G noted that some products are used “in similar ways all over the world – as with a shampoo,” but with other products, such as laundry detergents, there is more variance in local habits. Thus, the categories, “variable versus similar local usage habits” define a key Product dimension. For products in the “similar usage” category it makes sense to invest decisions about production and sales processes in a global unit, while more local decision-making about these processes makes sense for products in the “variable local usage” category.
The “Culture” Dimension The Culture axis in Fig. 3 could obviously reflect categories based on nations or regions. As Bhagat and McQuaid (1982) noted, however, nation is not synonymous with culture. There may be several cultures (norms, values, languages, etc.) within a given region or country, that can prove strategically important. For example, Hofstede (1991) suggested that individuals in Nordic countries express strong “feminine values” (preferences for harmonious relationships, avoiding open conflict, and emphasizing negotiation and compromise) more than in Germany or Italy, with obvious implications for negotiation processes. P&G’s strategy also provides an excellent example of defining the Culture dimension more advantageously than simply through country boundaries. P&G found that entry into low-income markets was much tougher than in high-income markets. Thus, low-income markets require local managers with more authority over the processes of marketing, sourcing and distribution. Such processes can be more uniform and centralized across high-income markets. In terms of Fig. 3, the Culture dimension is defined by the categories, “high-income versus low-income.” The high- versus low-income distinction might combine countries, or single countries might contain both high- and low-income markets. Galbraith (2000, p. 192) observes that geography may define
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appropriate Culture dimension categories for logistics processes, but not for many others.
Additional Potential Dimensions Galbraith (2000, Chaps 11–13) proposed augmenting the customary threedimension matrix (culture, function and product) to reflect two new dimensions: Common Customer and Solutions. “Common Customer” reflects customers whose interests span multiple geographies. “Solutions” represents particular product or service configurations, such as a power-generation or waste-treatment in ABB, or a bank trading room for Hewlett-Packard (pp. 194–195). There is clearly value in these two additional dimensions. However, the commonality of customer needs across geographies might also be incorporated in the Culture dimension, and product functionality elements in Solutions may be reflected in the Product dimension of the VCCP matrix in Fig. 3. Our thesis does not require resolving these issues, for both the traditional three-dimensional or Galbraith’s five-dimensional framework illustrate the value of embedding value-chain processes within each framework. We acknowledge the value of Galbraith’s additional dimensions, while developing our examples using the VCCP.
USING THE VCCP MATRIX TO UNCOVER NEW ANSWERS TO OLD QUESTIONS The VCCP matrix may assist organizations to identify more precisely where processes can be shared versus distinguished across Culture and Product categories. We have found that HRM and non-HRM leaders are frequently frustrated by questions such as, “Should the sales force be under the country managers or under the corporate center?” and “Should the country manager or the corporate product manager have authority over product portfolios in particular countries?” Such questions often fall to HRM leaders precisely because they cannot be solved using the traditional business frameworks (e.g. finance, production, marketing), and often involve delicate human relationships among highly powerful organizational leaders. Thus, paradoxically, some of the greatest opportunities for HR leadership to contribute offer the greatest challenge to existing decision frameworks. Framed solely at this level of analysis, such questions are virtually unsolvable, causing organization leaders frequently to resort to politics and opinion. This is regrettable because such questions have immense implications for strategic advantage. However, using the framework of Fig. 3, we find that the granularity,
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or logical detail, afforded by the VCCP matrix reveals both common and unique process-based questions, identifies whether process constraints are a function of culture or product, and often makes it possible to find new win-win solutions that were not initially apparent. Embedding processes within the Product and Culture dimensions may also clarify leadership development challenges. Hollenbeck (2001, p. 39) noted the qualitative difference between the balance of cognitive and emotional attributes required to manage across Products versus Cultures.
Linking the HC BRidge Framework and the VCCP Matrix In Fig. 1 the “Impact” element of the HC BRidge framework identifies where talent pools and structures connect to sustainable strategic success through processes and resources. In Fig. 3 the VCCP matrix embeds process analysis within Culture and Product dimensions. Together, “Impact” and the VCCP matrix identify the talent pools and structures that most affect the key constraints, and whether those talent pools and structures have their effects across Cultures and Products, or uniquely within specific culture and product combinations. Having integrated the talent pools and structures into a global framework, the “Effectiveness” and “Efficiency” elements of HC BRidge in Fig. 1 can build on the Talent Pool and Structure analysis to identify the Aligned Actions, Human Capacities, HR Policies and Practices and HR Investments that enhance “Effectiveness,” with appropriate investments, based on “Efficiency.” Galbraith (2000, Chap. 7) noted the importance of interpersonal relationships in achieving the “lateral coordination” that is vital to global strategic success. Such relationships and networks are an excellent example of the “Structures” element of the HC BRidge model, and its integration with global strategy. His diagnostic questions for human resources to identify and invest in these networks reflect the logic we suggest. Galbraith (p. 119) posed six questions: (1) What are the strategic dimensions – countries, products, customers – and their priority? (2) What are the management processes associated with these dimensions? (3) What are the key interfaces in the organizational units or subsidiaries? (4) Who are the people at these key interfaces? (5) How can we build relationships between these people? (6) How do we grow and develop people who will perform well at these interfaces? Notice how the questions proceed from strategic success, through business processes, talent pools and structures and roles, aligned actions (in this case, “relationships”) and then the development of human capacity to support them, just as in Fig. 1. This logic is useful beyond the process of lateral coordination and network building. It applies to virtually all of the strategic advantages and business processes in the global organization.
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APPLYING THE VCCP MATRIX: ARE COUNTRY MANAGERS “BARONS” OR “HOTELIERS?” The Economist (May 11, 2002, pp. 55–56) recently noted the increasingly important dilemma facing global organizations, One of the juiciest jobs in many multinationals was that of the country manager. Even relatively young companies had these local grandees. In the mid-1990s, however, many companies cut these barons down to size. There are many ways to rebuild the country manager’s role. The main thing is to define the scope of the job clearly.
Prior to the 1990s, global structures resembled many small regional companies, each with profit-and-loss responsibility, under one single global name. Country managers were like “barons.” In the 1990s companies like Proctor & Gamble, Dow Chemical and Oracle consolidated strategic questions about brands, investment and market development within global divisions. Country managers became like “hoteliers,” responsible for providing a favorable environment in their country for the divisional brands managed centrally. Some advantages were obvious, such as providing global customers with one contact point, rather than forcing them to negotiate separate contracts in each country where they did business. This also created dilemmas, such as the loss of global flexibility, the inability to attract top talent to global manager positions, etc. As we saw earlier, such dilemmas are very intractable when defined at this level. The Economist article describes how leading companies are finding solutions, which we suggest reflect a focus on processes. Visa Credit Company centralized in California the responsibility for brand, risk and interoperability processes, leaving everything else within the regions. Dow Chemical established local authority in eastern Germany for decisions about the processes of regulatory matters and relationships with government officials, because eastern German plants required significantly greater investment and government aid. In terms of Fig. 3, identifying the critical processes of government relationships and local capital acquisition defined the global-local decision in a more tractable way. Connecting this insight with the HC BRidge model of Fig. 1 provides insights for the development of German region leaders. Their pivotal role is their relationships with local authorities and governments, so their development should reflect that. Galbraith (2000, p. 98) notes a similar pattern for ABB, where “a strong country manager capable of making decisions and getting access to the appropriate ministries was a necessity.” Thus, rather than asking, “Should manufacturing plant decisions be owned by the region or the corporate center?”
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our framework suggests that the key process of government relations should determine regional leader qualifications, while other processes may be different. The question of whether a country manager is a Baron or a Hotelier is unsolvable, but which key processes require country-specific leadership and which ones benefit from central consistency is a more tractable question. Moreover, answering the second question provides a much more tangible link to talent implications using Fig. 1.
APPLYING THE VCCP MATRIX: SHOULD CUSTOMER SERVICE BE REGIONAL OR CENTRAL? One of the authors had a discussion with the European leader of a technology product organization that was rapidly expanding its design and service processes. The leader needed to get country managers and corporate leaders to articulate their concerns in terms of win-win solutions. Each group instinctively defined the issues at a level that produced intractable positions. For example, country managers insisted that they needed their own dedicated customer service workforce. How else could they guarantee suitable service to their key local customers? Corporate leaders, on the other hand, noted the worldwide shortage of talented high-level service representatives familiar with the organization’s technology. Any single country might have only one or two such representatives, and assigning them exclusively to regions meant they often spent their time on menial service issues while in other regions high-level service needs went unmet. As one corporate leader put it “Why should we have expert technicians explaining to German customers how to plug in the machine, while at the same time we have customers in South Africa with very sophisticated problems, who can’t contact a technician to help them?” The Culture dimension of the VCCP matrix suggested that the crucial issue was not so much about countries or regions, but rather about how the service process varied with economic development. “High-end service needs” were characteristic of economies with advanced telecommunications and computer infrastructures, which spanned regional boundaries. Virtually all of these high-end service needs were addressable using the English language (in fact, many of them required facility in programming languages, which clearly spanned regions), and these service needs were also quite similar across regions. In contrast, “low-end” service requirements tended to be much more region-specific, and often involved interacting with a client’s technicians who could work only in their local language and who needed significant coaching. By distinguishing high-end service processes and associated talent pools and structures from low-end service
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processes and talent pools and structures, it became clear that a solution depended more on defining Culture in terms of the sophistication of the infrastructure than traditional regions. Seen this way, it was possible to envision a service process structure that was both local and global.
A COMPREHENSIVE EXAMPLE: APPLYING THE VCCP AND HC BRIDGE FRAMEWORK TO A MULTINATIONAL TECHNICAL ORGANIZATION The examples described above illustrate isolated elements of our framework, but it is useful to trace it comprehensively. We do that in this section. We are indebted to the global HRM leaders with whom we have consulted and who have participated in our executive development programs over the years, for their insights and suggestions in developing our framework. One such executive presented the following actual case which we will disguise by using a fictitious name, GlobSys.
GlobSys Background GlobSys is a multinational company with one primary product line, a set of technically sophisticated printing devices, sold to companies with high-level printing requirements. The product relied on proprietary R&D and manufacturing, which had originally been developed in Europe, by a small group of entrepreneurs. They designed the first prototype with very few resources, had obtained patents on components, software and manufacturing processes, and had enjoyed success marketing to a relatively small number of customers in their home country. They were justifiably proud of their innovation and its ability to compete effectively against products from massively larger companies. Soon after their initial success, they were approached by a large North American company with an established record of customer relationships and strong sales in North America, but that lacked state-of-the-art printing products. The North American company offered to merge with the European start-up in what seemed a very logical way to match between the innovation and product advantages of the start-up, and with the sales and marketing of the North American company. Because North America was a vastly larger market than the entrepreneurs’ home countries, the prospect of enhanced revenues and profits was attractive, and the two organizations merged. When the case was presented to us, the merger was more than a year old, and the HRM leader observed that many of these synergies had never materialized, and the new organization was plagued with product failures and customer complaints.
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The North American sales force reported that their customers found the products too complicated and unreliable. The European design and manufacturing leaders complained that the North American sales force was too unsophisticated to properly educate and support customers using the state-of-the-art system. Corporate leaders had considered several initiatives to remedy the situation. First, they considered this a problem of “culture.” Europeans and North Americans didn’t share a common cultural background and global mindset. Programs were devised to educate both groups in the importance of cultural diversity and sensitivity, to little avail. Next, they surmised that a different kind of “cultural divide” was the culprit, noting that all of the European leaders were engineers, and none of the sales force were engineers. Thus, the sales force was provided with intensive training on the engineering and design logic of the systems, and the nuances of the complex software required to run them. Again, there was little change in sales or attitudes among the two groups. The sales force pointed out that customers were already familiar with the use of the systems, but that the Europeans insisted on frequently introducing new design elements or software features, each one increasing the chance of a system failure. Thus, the problem was framed in terms of two highly-incompatible positions. The North Americans wanted to “fix” the design and manufacturing process, to ensure that product designs were sensitive to customer requirements and limitations. The Europeans wanted to “fix” the sales and service processes, and to staff them with engineers who understood the nuances of the product. Both groups were smart and highly motivated to find a solution, but their dominant decision models – design engineering and sales – were simply not up to the task.
GlobSys VCCP Analysis Figures 4 through 7 demonstrate how we applied VCCP analysis. First, we worked with the HR leader to develop the value chain diagram shown in Fig. 4. Because this company had one product line, there was only one row in the matrix. The company had two cultures, Europe versus North America, though it was observed that one might as easily label them “Design/Engineering” versus “Sales/Customer Relations,” illustrating our earlier observation that Culture categories may go beyond simple region or country distinctions. Thus, the value-chain diagram was embedded in a grid with one Product row and two Culture columns. Fig. 5 illustrates the results of the constraint analysis, within the VCCP matrix, contrasting the perspectives of the two cultures. The central issue was really a disagreement about whether Design or Sales/Service was the constraining factor in the process value chain.
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Fig. 4. Value Chain for GlobSys.
Fig. 5. VCCP Matrix Analysis of GlobSys.
Figure 6 shows the conclusion of the analysis. In fact, both processes were key constraints, and the organization could ill afford the waste of human capital that would result in wholesale replacement of either group. The entire logic of the merger now was vividly seen to have rested on the assumption that these two groups would work well together. There was a need to create structural synergy between the design and sales processes. Hitt, Nixon, Hoskisson and Kochhar (1999) described a similar situation in which the lack of trust produced “overt resentment expressed by the technical team members, especially toward
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Fig. 6. Global Constraint Analysis – Process Synergy.
the marketing team members.” We would suggest that by using the Value Chain, Culture and Process matrix, it is possible to identify where trust has its greatest effect, and also to describe such thorny issues in objective terms that may encourage more rational discussion. With this insight, it was possible to return to the HC BRidge framework in Fig. 1 to identify the talent and HR implications.
Using “Impact” to Identify Pivotal Talent Pools and Structures at GlobSys When the analysis was reframed in Fig. 6, the key question became “which talent pools and structures most affect our ability to create synergy between our North American sales group and our European engineers?” The previous failure of the prior HR investments in these talent pools suggested that neither the Engineering nor the Sales talent pools had the human capacity to achieve this. However, another talent pool emerged. The organization employed another group of engineers, called “Pre-Sales Engineers.” Their traditional role had been to educate the sales force about the product. In this position, they were on good terms with the engineers, by virtue of their close association through learning about the product features. They were also on good terms with the sales force, which relied on them to help translate product designs into messages for the market. The “job description” of the Pre-Sales Engineers revealed little of their strategic potential. It was written solely from the traditional perspective, and emphasized their performance in effectively understanding product features, conveying those features to the sales force, and assisting with customer relations. Key competencies included engineering expertise, an ability to learn quickly, good communication skills, and the ability to understand customer needs. It had not occurred to either
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the organization’s strategists or to the HR leaders that this “job” might play a role in the complex problem of multicultural relationships. Yet, as Fig. 6 makes clear, this is precisely the talent pool that has the greatest potential impact on process synergies between the two groups. When seen through the lens of the VCCP analysis and the “Impact” elements of HC BRidge™ , the “pivotal role” of Pre-Sales Engineers became apparent. They were the “diplomats” who could forge more productive structural relationships between the engineers and the sales force. In fact, this “diplomat” role was probably their most pivotal contribution, because the lack of such synergy was a crucial constraint, limiting organizational success. This is a good example of the pervasiveness of leadership across all employees and organizational levels (Day, 2001, p. 586), which requires helping pivotal leadership talent (the pre-sales engineers in the GlobSys example) to “understand how to relate to others, coordinate their efforts, build commitments, and develop extended social networks.” Using “Effectiveness” to Identify the Strategic HRM Implications The insight about Sales Engineers as diplomats guided the analysis of “Effectiveness” using the HC BRidge framework in Fig. 1. It led to a revision of the definition of the pivotal role of Pre-Sales Engineers and the associated human resource implications. Table 1 depicts the results. As the two right-hand columns show, the HRM implications for the Pre-Sales Engineers changed considerably based on this new strategic analysis. Moreover, the added programs and investments could be strategically justified using the VCCP analysis. Finally, and perhaps most importantly, the analysis provided a valuable basis for communication with Engineers, Salespeople, and the Pre-Sales Engineers, to convey the strategic imperative of their roles, and the logic of the organization’s plan.
FINAL THOUGHTS, CONCLUSIONS AND IMPLICATIONS The importance of human capital for global strategic competitive advantage is wellrecognized, not only by human resource management scholars and practitioners, but by virtually all leaders of global enterprises. Sophisticated strategic leadership frameworks now exist, and collectively they suggest several important trends. First, the complexity of global organizations will not be served by relying on traditional HRM models that emphasize job-based systems, programs that merely follow best-practice, and an HRM role defined only in terms of services provided to key organizational clients. Global strategic advantage demands that today’s HR professionals develop and implement Talentship, a decision science for talent, with the same depth, credibility and sophistication as decision sciences such as
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Table 1. HC BRidge™ Analysis of Pre-Sales Engineers at GlobSys. HC BRidge Component
Traditional Definition
Globally Strategic Definition
Pivotal Role
Effectively learn new product design features and develop educational methods to convey those features to the sales force, so that they can be effectively communicated and used by customers.
Diplomatic relations with engineers and sales people, producing greater cooperation and understanding, leading to product designs that better reflect customer requirements and sales behaviors that better exploit unique product design features
Aligned Action
• Quickly understand new product features
• Serve as a neutral and trusted liaison between sales and design • Encourage cooperation and collaboration between engineers and sales people • Facilitate conflict resolution
• Design effective education processes • Deliver education to the sales force Human Capacity
Capability • Know how to share new ideas • Speak Multiple Languages Opportunity • Authority to convene educational events • Authority to assist sales and engineering managers to support training Motivation • Desire to educate • Passion for design innovations • Value team effort
Capability • Conflict resolution skills • Speak Multiple Languages Opportunity • Included on design/sales teams • Freedom to stop selling and work with teams Motivation • Desire to educate • Desire to create a link • Belief that linkage efforts will be rewarded • Value team effort
Human Resource Policies and Practices
Rewards/Recognition • Pay for education events • Pay for skills Development • Train on education skills • Hands-on product experiences Staffing • Select for communication skills
Rewards/Recognition • Pay for delighted customers • Team-based rewards Development • Train on negotiation skills • Cross-cultural experiences • Global cultural integration Staffing • Select for “diplomacy”
Human Resource Investments
Rewards/Recognition • Enhance incentive pool • Appraisals reflect class evaluations Development • Spend on engineering skill training • Spend on sales skill training Staffing • Buy selection tests for engineering and sales proficiency
Rewards/Recognition • Enhance incentive pool • Information system to track delight • Appraisals to reflect group cohesiveness Development • Mentoring for cross-functional careers Staffing • Buy selection tests for diplomacy
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Finance and Marketing. Future organizations will rely more on informal networks, social relationships, trust and mind-matrices, than on organizational structures, job descriptions and HR processes. These networks and relationships will increasingly depend on a shared vision and philosophy about how talent creates competitive advantage, based on a deep understanding of the organization’s global competitive advantage and the key processes and roles that contribute to it. We have proposed that the effectiveness of such networks will depend on the quality of decisions, and in particular, the quality of decisions about talent, wherever they are made. This new decision science must provide a common language or point-of-view connecting talent to sustainable strategic success, just as Finance and Marketing provide for financial and customer resources. We have offered an initial framework, HC BRidge, to illustrate these connection points, and the ValueChain, Culture and Product (VCCP) Matrix to embed them within a global strategy framework. The implications of our framework are reflected in three general observations: (1) The need for greater depth, detail and sophistication in connecting talent to global sustainable strategic advantage; (2) Identifying pivotal talent pools and structures should precede the development of HRM practices and measurements, not follow it; and (3) Effectively understanding, measuring, comparing and enhancing the “mental models” that leaders use to make talent decisions will be increasingly important to organizational success.
Both HR and Non-HR Leadership Development Must Include a Talent Decision Science The need for a decision science of talent is a fact, though it is not yet widely recognized. As organizations rely more heavily on informal structures, networks and shared vision to guide key strategic decisions, there will be an increasing need to articulate and share common perspectives regarding how talent contributes to strategic advantage. Thus, both researchers and practitioners will benefit from efforts to extend and enhance these connections. We must certainly move beyond the concept of a mysterious “black box” that exists between organizational performance and HRM practices, and instead embrace the challenge of defining and mapping all of the key bridging elements. The HC BRidge framework offers a starting point, which we hope will be enhanced and embellished through future work. Virtually all existing research that describes relationships between HRM practices and employee reactions or behaviors, or their association with financial outcomes, contributes to this task. The key is to integrate this wealth of knowledge more clearly and in context. We urge both researchers and practitioners to use the
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“bridge” metaphor to better identify the implications of their research for key talent decisions. As the Lincoln Electric example showed, tracing such connections can reveal new relevance in research on global organization design, compensation, staffing and communication. This implies that both global leaders and leaders of the HR profession must be jointly accountable for building and using a shared and common language regarding talent. In our work with organizations, we find that this language is seldom successfully introduced by HR acting alone, or by non-HR leaders acting alone. The best results occur when we engage both groups to adapt the HC BRidge model using their own strategic language, and then incorporate the results into both general leadership development and HR professional development. In this way, organization leaders are prepared to become “informed collaborators” with their HR counterparts, and HR professional leaders are prepared to engage leaders in ways that connect talent with their best analytical and logical insights about global competitiveness. Global business leaders should be expected to develop proficiency in the “talentship” decision science, just as they are expected to develop proficiency in the decision sciences of Finance and Marketing. HR leaders should be expected not only to apply, but to teach this shared language as they collaborate with employees and business leaders to enhance key talent decisions. HR leaders should do less persuading and selling of HR programs and more supporting and holding accountable the leaders who are the stewards of global talent. This is far different from many typical HR “partners,” who mainly design and implement HR programs and services, or help global leaders manage the administration of HR policies.
The Talent Decision Science must Guide Global Talent Investments, not Merely Evaluate HRM Programs Recognizing the talent decision science makes it not only possible, but essential, that the HRM profession shift from connecting talent to organizational outcomes merely to assess the effectiveness of HRM investments after the fact, and instead strive to create connections that can direct those investments to their greatest impact on strategic advantage before they are made. Today, HRM programs are typically undifferentiated, such as providing training in cultural diversity to everyone or surveying all employees on whether their supervisors and co-workers exhibit a global mindset. There are many taxonomies of global competencies (particularly competencies to adjust to new cultures), and corresponding organization and HRM practices designed to produce more global leadership (Hollenbeck, 2001; McCauley et al., 1998), but the focus on broad competencies or experiences
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lacks differentiation. As organizations better identify their key processes, and rely more on networks of shared vision, they will increasingly demand that HRM investments be as rigorous and logical as their investments in production and marketing (Boudreau & Ramstad, 2003). Again, the implications for leadership development are significant. Leadership development investments should be targeted in advance toward those pivot points where changes will most affect strategic success. Development assignments to global task forces, expatriate roles and functional responsibilities, as well as classroom and other leader development experiences, should focus more clearly on the strategic impact of leadership, reflected through value-chain processes. Effective global leadership is not one generic outcome, but likely varies with elements of the situation (e.g. Hollenbeck, 2001, p. 39). Leadership development frameworks commonly include steps such as acquiring, assessing, developing and transitioning talent (Corace, 2001; McCauley et al., 1998). We suggest that a process-focused framework, integrated with HRM practices, can enhance the analytical rigor needed to differentiate and target these activities. This process-based perspective can reveal new dimensions of development experiences themselves. Conger and Benjamin (2000, p. 255–256) noted that traditional development approaches built on exposing leaders to novel events, special action-learning experiences, or job rotations, either provide little variety, insufficient connection to work context or take too long. The solution requires that organizations must “define and bound each training experience more definitively,” “rely on new technologies [simulations and micro-worlds],” and “leverage the capabilities of strategic partners.” They suggested that new leadership development approaches will be “more customized, learner centered, and integrated with the organization’s immediate strategic agenda” (p. 149). This more definitive and precise approach requires significantly greater detail, which we believe will be provided by linking business processes with Product and Culture, to identify the pivotal nature of leadership, and then constructing leadership development to focus on those pivot points. For example, one of the authors recently worked with a large global organization that required all leaders to complete two overseas assignments before consideration for positions in the Senior Management Group. Yet, one female HR leader newly promoted to the senior group, noted that she had not completed two overseas assignments. Her work-family priorities resulted in the fact that she had never lived outside her home country. Fortunately, that home country was also the location of corporate headquarters, so she had held positions that allowed her to experience the key processes needed for top leadership. She had negotiated global alliances, bargained with globally diverse labor organizations, and worked closely with many of the current senior management leaders. It was experience in these key processes
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that mattered, not the credential of living in two different countries. Fortunately, in this case, this was recognized; she admitted it was more by happenstance than design. We find that the best organizations understand this, and typically even have a handful of HR and line leaders who can articulate this level of rigor in their talent mental models. Yet, such mental models are rare, they often arise only through good fortune or unusual experiences, and they are not easily nor reliably replicated or used by the vast majority of decisionmakers. Much value can be gained by making such knowledge more systematic and explicit, which will enhance the accountability and rigor of global leadership development. HRM measures must increasingly support and reflect more of the linking elements between HR investments and strategic advantage (Boudreau & Ramstad, in press, a), and this is especially true for leadership development, which is resource-intensive and often poorly understood.
Mental Models Mapped with the Talent Decision Science should Guide and Inform Global Leadership Development A talent decision science is not only a tool for improving decisions, it is a diagnostic template for mapping and comparing existing mental models that leaders, managers and employees use to discern talent-strategy connections (Boudreau & Ramstad, 2003). Our anecdotal experience suggests that such mental models are highly variable. Lacking a shared framework, individuals often develop quite different ideas about the connection points between talent and sustainable strategic success. It seems likely that differences in mental models can help explain disagreements about talent decisions, or ineffective global organization designs, HR practices and alliances. Thus, future research and practice can use frameworks like HC BRidge and the VCCP matrix not only to analyze strategy, but to map and articulate the mental models of key decisionmakers. Such descriptions are the first step to identifying the areas of agreement and disagreement, and then building a shared perspective. For example, we have used HC BRidge as a framework for leadership development exercises in which participants create and compare their mental models about talent, often with surprising and stimulating results. More formal and systematic comparisons seem likely to yield more generalizable patterns and results. Thus, it is our hope that the HC BRidge framework in Fig. 1, augmented by the global strategic process perspective embodied in the VCCP matrix of Fig. 3, will encourage future research to define and develop a true decision science for strategic global talent.
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NOTES 1. HC BRidge™ is a trademark of the Boudreau-Ramstad Partnership. 2. This section is derived largely from Boudreau and Ramstad (2003).
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COMPETENCE, NOT COMPETENCIES: MAKING GLOBAL EXECUTIVE DEVELOPMENT WORK George P. Hollenbeck and Morgan W. McCall, Jr. ABSTRACT As we begin the 21st century, evidence abounds that executive and leadership development has failed to meet expectations. Unless we change our assumptions and think differently about executives and the development process, we will continue to find too few executives to carry out corporate strategies, and the competence of those executives available will be too often open to question. The “competency model” of the executive, proposing as it does a single set of competencies that account for success, must be supplemented with a development model based on leadership challenges rather than executive traits and competencies. Executive performance must focus on “what gets done” rather than on one way of doing it or on what competencies executives have. In turn, executive development must be viewed as meeting performance challenges essential to the business strategy rather than attending development programs, with senior executives making development decisions much as they make business decisions today.
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INTRODUCTION Plant a carrot, get a carrot, not a Brussels sprout. That’s why I like vegetables, you know what you’re about. (From the long-running play The Fantasticks).
As we begin the 21st century, global executive development is not working. The processes and assumptions that guide current practice are no more likely to result in the required leaders and executives than those of 30 years ago. Developing executives is by any standard an uncertain enterprise, sometimes guided more by hope than experience. Despite gurus who proclaim that there is a “science of leadership development” waiting for application, in fact people simply don’t develop on linear, predictable paths: That unpredictability is reflected in the quotation that begins this chapter. A number of current trends seem to make the development enterprise even more difficult and uncertain than it has been in the past. These trends – for example, globalization, multiple careers, industry consolidation, transition of organization form and ownership, shorter time horizons – at least on their surface seem to make matters worse rather than better. The result is that organizations may be even less likely to produce the executives and leaders they will need than they have in the past. In this chapter, we offer: (1) A case that global executive development is, indeed, not working; (2) indications of why it is not; and (3) alternative ways of thinking about executive development that, we hope, will increase the likelihood that development will take place. Our discussion is based on observation rather than science, although to the extent there is any science we will draw upon data. It is intended to be provocative rather than prescriptive, although we will suggest new directions. It means to stimulate ideas rather than stand on ideology, although our critique stems from our own, admittedly U.S.-centric views. Our perspective is drawn from studies of global executive development over the last several years (Hollenbeck, 2001; Hollenbeck & McCall, 1999; McCall & Hollenbeck, 2002; Spreitzer, McCall & Mahoney, 1997). During the course of our research, we have had the opportunity to examine global executive development from the perspectives of organizations and individuals in both global and domestic organizations; we have examined the wealth of development literature; we have had the opportunity to engage in thoughtful discussions with those charged with development in their companies; and, we have talked with executives and leaders, some with illustrious careers, about how development has worked for them. For
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this chapter we use those experiences as our base. If we are successful in our presentation, practitioners and consultants will complain that we have set up a ‘straw man’ to tear down, and academics will criticize the lack of empirical data. If the reaction creates a better straw man or leads to new research, the chapter will have served its intended catalytic purpose.
GLOBAL EXECUTIVE DEVELOPMENT IS NOT WORKING Examples and evidence abound in the popular press and business literature that global executive development is not working. Although our focus is on global executive development, we contend that developing domestic executives is, surprisingly, no more effective . . . surprisingly because the world of domestic business and, in turn, development of domestic executives, is an order of magnitude simpler. (See McCall & Hollenbeck, 2002, for a discussion of what constitutes global work.) We have chosen six themes to make our point. Whatever the current processes, they are not producing the executives required and little has changed over the last 30 years. We recall that in the 1970s, Citicorp legend Walter Wriston said that it was easier to find $100 million than a competent executive. In the middle 1980s, John Kotter (Kotter, 1988) made the same point, this time focusing specifically on leadership development, that leadership was a scarce commodity. More recently, a survey of U.S. Fortune 500 firms found that although companies rated “competent global leaders” ahead of all other business needs for the future, nearly all (85%) did not think they had enough global executives to carry out their strategies (Gregorson et al., 1998). “The War for Talent” (Michaels, Handfield-Jones & Axelrod, 2001) owed its popularity to the shortage of executives as well as technical employees. In addition to being in short supply, the competence of those executives who are available is widely questioned. Behind most failed business strategies is a trail of executive failure and misadventure, either in the planning or the execution. Doubters need only read a recent analysis of the visible failures of 14 major U.S. companies (Charan & Useem, 2002) to find executive shortcomings behind the “Ten big mistakes” that companies make. And, as the article points out, “CEOs offer every excuse but the right one: their own errors.” The 14 examples may be U.S. companies, but it seems unlikely that a similar analysis of non-U.S. based companies would produce very different results. While competence may be in short supply, competencies are legion. But, despite their prevalence in HR models, executive competencies have not prevailed in the executive suite. The foundation of most executive development efforts over the
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past decade – executive competencies and competency models – have failed to become the lingua franca of executives (see Hollenbeck & McCall, 1999 for a review and critique). As useful as they have been for modern HR management and as much as they have influenced HR practice and practitioners, one needn’t look far to find that competencies have had little influence on how senior executives think about executive capabilities, assignments and development needs (Sorcher & Brant, 2002). Decisions about executives continue to be short-term and expedient, dominated by today’s needs for operating the business and rarely including a development component for the future. In the annual discussion of executives, whether in London or Los Angeles, the needs for development are seldom tied to the strategy of the business, or integrated into the fabric of the enterprise. Worldwide these discussions seem to be modeled after General Electric’s “Session C,” but they typically fail to make development a part of the organization’s operating culture. A knowledgeable consultant, talking to an HR group about a benchmarking survey of large U.S. companies, reported that only one-third even said they tied development to business planning, and in a candid moment he estimated that perhaps only 10% of his 50 to 60 clients actually did. The argument that leaders are born and not made is alive and well: “. . . as far as executive leadership is concerned, people are reasonably complete packages by the time they arrive at the corporate doorstep” (Sorcher & Brant, 2002). The belief survives, despite the fact that the identification of the native “talent” is always made in hindsight, and every executive we have ever interviewed was able to tell us of significant experiences that shaped him or her as an executive (see McCall & Hollenbeck, 2002, for the key learnings of a sample of 101 global executives). Not only is it widely believed that leaders are born and not made, there is a growing belief that people don’t change. Despite the continuing stream of “self development” books, the Gallup Organization’s bestseller has a theme that might be characterized as “people don’t change much, so learn to use their strengths” (Buckingham & Coffman, 1999) – though not always bad advice in itself, it is only part of the story. Development has, in many companies, become the responsibility of the executive rather than the company. An HR development officer in a large high tech company recently told us, “We say that development is 50% the executive’s responsibility, 50% the company’s, but in reality it is 95% the executive’s.” This particular comment may be extreme – characteristic of a fast cycle business in distress – but our point is more general. Throwing up one’s hands and pushing responsibility out is another way of “outsourcing” at no cost . . . “That’s not our problem, it’s yours.” Like many of our trends, the shift may actually benefit everyone involved and underscores that executives “develop” more than
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companies “develop them;” but it also reflects the realization that development is a failed process, that our efforts are not worth the time and money. We rest our case. Our point of course is that despite high hopes and enormous resources devoted to it, executive development as practiced over the last 30 years has not succeeded. While we would not argue that it has made no difference at all, any difference made has been “too little, too late.” In the language of performance appraisals, executive development “did not meet expectations.” Perhaps our expectations have been too great. Perhaps developing executives is not something that can be influenced in any meaningful fashion or with any magnitude. We think that is too fatalistic a view, and, rather than throw out the squalling baby with the cold bath water, we turn now to, “Why not? Why hasn’t it met our expectations?”
WHY EXECUTIVE DEVELOPMENT HAS FAILED Finding order in the chaos of executive development failures is more difficult than it might at first seem. To paraphrase Tolstoy’s comment about unhappy families, every executive development effort fails in its own way. If we were to examine specific failed company development efforts, the most frequently cited reason would likely be “lack of support from senior executives.” This proved to be the case at a recent conference of company executive development officers that closed with the lament, “How can we get the support of the CEO for development?” Our search is a more general one; we seek underlying themes that offer some insight into WHY senior executives don’t support the effort, recognizing that like all themes, there are exceptions. We have chosen five of these themes:
Executive Development has been Tied to the Wrong Model of “Man” The dominant model is an engineering, or “piece parts” model, that assumes that the effective executive is the sum of a set of pieces or competencies. The development assumption is that if we develop these competencies one after the other, then an effective executive will emerge eventually. Not only is the model wrong, as every executive knows, executive performance doesn’t work that way. The very nature of executive jobs (with the CEOs the prime example) is that they can be done in myriad ways. What gets done (within ethical and moral limits) is more important than what one does, and what one does is more important than what competencies or traits one has. The unique thing about CEO jobs, and the thing that makes them so interesting (and we might add, so well paid) is that there
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are as many ways to perform effectively (or ineffectively) as there are executives. No two CEOs do the same things much less in the same ways, or have the same competencies. This conclusion is not only obvious on its face, it is evident when we observe outstanding leaders, whether military officers, heads of state, or CEOs – one cannot but be struck more by the differences than by the similarities in their makeup. The principle at work is that as we move up the corporate hierarchy, the mix of “what you do” to “what gets done” changes. At the lowest level, say a machine operator, performance depends quite literally on what you do – being at one’s workstation and going through the tasks required to operate the machine; deviations from assigned tasks are recipes for failure. Move up a level, and the operator’s supervisor has a level more of flexibility – the actual behaviors used to get things done can vary from supervisor to supervisor, even though effectiveness may take similar forms. At the executive level, there is a great deal of freedom (within the limits of legal, ethical and cultural constraints) to do the job in their own ways – as long as they get results. Not only do CEOs have considerable freedom to do whatever they want, in some cases they may even be able to define the required results. At the machine operator level, occupational psychologists have been quite successful in specifying what competencies are required (e.g. mechanical ability), and in selecting those who have more of it (via mechanical comprehension tests) and training them specifically for the tasks required. This sequence is illustrated below: Competencies → Behaviors → Results Unfortunately, this additive competency approach breaks down in planning executive development. The complexity of executive jobs allows for a multitude of ways to do them, of talents to be used and even results to be obtained. At the highest level, the same result (e.g. earnings per share) can be achieved by different executives with many different competencies and in many different ways. The behaviors that any one executive engages in to achieve effectiveness are staggeringly varied and complex. Competency researchers attempt to simplify the multitude by broad groupings of behaviors such as “complex problem solving.” But if we consider the result . . . complex problems are solved . . . rather than the behavior, we see that these broad groupings fail to recognize the many different ways to get complex problems solved. The examples we can give of behaviors that achieve this result are limited only by our imagination – one executive may solve
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the problems herself, another may depend on a very smart team, one may have a resident genius assigned to the task, one may use consultants. When executive development, as well as executive selection, focuses first on the behaviors or the competencies rather than focusing on the results achieved, the complexity of human activity is ignored (Weick, 1969). Put another way, at the executive level there is a loose coupling between the competencies, the behaviors and the results. Whether we call them traits such as “cognitive complexity,” or simply rephrase them as behaviors (e.g. “Ability to Solve Complex Problems”), in such a tenuous system prediction from competencies to behaviors to results is uncertain at best. So it should be no surprise that the most common starting place for executive development strategies – develop a competency model – seldom garners much executive support where it really counts – getting the business results. This is not to say that focusing on inputs – competencies and behaviors – cannot be helpful in the specifics of executive development: Competency-based 360-degree feedback can provide direction to behavioral executive coaching that can improve the effectiveness of executives; training programs can teach, for example, steps that enable executives to handle the transition to a higher level effectively. These interventions, limited though they may be, can be important for the organization and the executive, but they will not an executive make. Nor are we arguing that competency models do not have their place – obviously they do; we would not want to deny a useful tool. And, minimal levels of competency in four “learning domains” are (or should be) required at senior executive levels: motives and values, analytical and technical competencies, interpersonal competencies, and emotional competencies (see discussion by Edgar Schein, 1996a). These learning domains (viz., competencies) can serve as useful guides for evaluating executives and as elements of an executive development strategy. As Schein points out, learning in each of these areas may be done quite differently. And, we do not argue that competencies, whether called traits or dimensions, have not been useful in selecting talented individuals. But, taken alone, they can never explain the particular mix of competency and character and practice that go into an executive’s obtaining outstanding results. Competency gurus will rebut our observations, arguing: “I am in the business of predicting and explaining the behavior of groups, not accounting for individual cases.” Our reply is that executives don’t develop as groups; they develop the old-fashioned way, individually, one executive at a time. “One-size-fits-all” programs have their place as companies attempt to scale their training efforts toward minimal competency, but they do not produce the competent executive.
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Executives Develop, You Can’t do it to Them A riddle from our childhood went like this: “They say time flies. But you can’t do it. Why?” As a similar saying in many cultures goes: “You can lead a horse to water but you can’t make him drink.” Of course, the same applies to executive development. Despite obvious shortcomings of the “engineer-the-executive” approach, companies continue to act as if they can drive the development process. When their efforts fail, in frustration they conclude that people don’t change, that leaders are born and not made. A few companies have discovered that executives develop on their own; that you can’t do it to them or for them, and that executives learn, companies don’t teach. Like our riddle this may be a bit of a play on words, but it reflects the realization that organizations establish a context for learning and development. In the right context, the executives will develop themselves, and learn the lessons of experience that allow them to achieve the organization’s results. Try as we might, we can’t make executives change. Too structured or too laddered a system of executive development overemphasizes the organization’s capability and raises unrealistic expectations for the development process. Executive development is uncertain in an uncertain world, and realizing that fact changes the focus of development efforts. A Signal to Sell your Stock? A colleague who suggested that the building of a corporate university is a sign to sell a company’s stock may have little stock-price research to support his conclusion, but he does have a point. Sometimes the bricks and mortar of corporate universities may indeed signal a company whose primary executive development strategy is based on programs of executive education. Classrooms and programs can be essential contexts for executive learning, perhaps more important in developing global rather than domestic executives (McCall & Hollenbeck, 2002). But when programs are the primary development tool, the development strategy ignores the widely researched conclusion that executive development programs are but one of the learning contexts that executives experience, one that takes a backseat to job assignments as the drivers of development. A “program” rather than an assignment-based development strategy means that the organization is working the margin of development, not the core. Executive Development is Supply Driven A strategy consultant at a recent executive development conference said, “Everything I have heard over the last couple of hours leads me to conclude that
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executive development in your organizations is supply driven.” The consultant’s astute strategic ear had captured an important reason why development has failed. There is no customer; development is not integrated into the organization, is not seen as mission critical or even mission-related. Development executives search for ways to get the “support of the CEO,” but seldom are they able to tie development effort and expenditures to the output concerns of the organization. Why is executive development so seldom tied to the organization’s operating or business planning? In part, we believe, because those charged with executive development are ill equipped, through time, effort or competency, to make the link themselves or to engage the operating executives in the task. One factor in this is the “program mindset” and the na¨ıve belief that given the right programs, the CEO will support the effort. However, is blaming the mindset of HR too easy a target? Are we asking the impossible no matter what mindset is used? The aforementioned strategy consultant went on to admit that few organizations have well-developed business strategies. Few have used the strategy tools of customer analysis, competitive advantage and value chains analysis at a level where the executives can be good partners in contributing to planning development. And for many organizations, the world of the 21st century business environment may simply be out of synch with the way executives develop. Development time, measured in years (10–20 years by most estimates) runs into the reality of business time (“web quarters” and 24/7), and fast cycle business.
Self-Development for What Purpose? Efforts at self-development (the values, motives, interests, and passions of the executive that are essential bases of leadership), have had the unintended consequence of shifting focus to self-development per se rather than as a means to an end. The importance of personal development in becoming a leader was recognized in the Harvard Business Review’s year-end 2001 Special Issue, “Breakthrough Leadership.” The editor’s introduction “Leadership’s First Commandment: Know Thyself” (Collingwood, 2001) set the stage. Timely and essential as the prescription may be, incorporating self-development into executive development runs the risk of forgetting that development of the self is not an end in itself for the executive, but a means to the end of organization effectiveness. For executive development to focus its efforts on self-development per se risks further alienation from the executive culture, focused as it is on results and output (Schein, 1996b). Until executive development finds ways to connect and be seen as contributing to the concerns of the executive culture, the executives will not accord it the support that it thinks it deserves.
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Our next question is, “So what?” If executive development has failed to meet expectations, and if the reasons we give are at least arguable if not exhaustive, what can be done? How could the future be different than the failure of the past? What can organizations do to turn executive development from a failed proposition to a vital part of the organization’s success?
SO WHAT? It is possible that executive development, like performance appraisal, is simply one of those things that so completely butts up against the human condition that the best one can hope for is incremental improvement. Perhaps, indeed, as the saying goes, “The difference between bad and worse is greater than that between good and best.” We can simply go about our work to define more elegant human resource strategies, refine our competency frameworks, design better development programs, and beg ever more vehemently for management support. If, however, there is a way out of the woods it’s likely to lie on a different path. We need a different way of looking at the person and what it means to be a leader; we need a different understanding of why people change or don’t and what development means; we need stronger linkages between development and the business strategy; and we need to redefine the role that top management plays in leadership development.
A Different Way of Looking at the Person and What it Means to be a Leader For decades leadership researchers have focused on the individual manager or leader, searching diligently for the traits, behaviors and, most recently, competencies that uniquely describe the species. The fruitlessness of that task has not prevented development folk from pursuing the same empty promise that has enthralled the leadership researchers and philosophers before them. The appeal of defining leadership by focusing on the qualities of the person (as described by a finite set of traits, style, characteristics, KSAs, or competencies) seems all but irresistible, even though doing so has failed to much advance either scholarship or practice. It is like being in a car stuck in snow and pushing harder on the gas pedal to get it out. The alternative to spinning our wheels faster but going nowhere is to shift the focus from the person to the work the person needs to do and in turn, on the results that need to be achieved. This is not a new idea. The “functions” of the executive was a topic as far back as 1938, when it was the title of a book written, significantly, by an executive (Barnard, 1938/1972). Others have considered leadership, or at least management, as a job rather than a set of personal attributes,
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notably Henry Mintzberg in his early 1970s classic on managerial roles (Mintzberg, 1973). Again, tellingly, this work was based on observations of managers at work rather than on personality measures or questionnaires. More recently, a handful of scholars inadvertently furthered this tradition in their pursuit of the difference between managers and leaders – distinguishing between the two concepts required looking as much at what executives do as who they are (Bennis, 1989; Kotter, 1990). Ron Heifetz, a psychiatrist, tackled the leadership domain and he also ended up emphasizing what leaders do, and not just their personal characteristics, in his aptly named book, Leadership without Easy Answers (Heifetz, 1994). The pattern that emerges is that when research is conducted by executives or based on observations of executives or done by people outside of the “trait” mindset, what needs to be done, not just who does it, takes on significantly more importance. This is not to say that who a person is or what their skills (or their “competencies”) may be aren’t important, but rather to suggest that something might be gained by approaching the topic from a different perspective. And perhaps in the bargain, we get closer to the language and daily reality of the executive world, thereby creating in the end a more usable process. Thinking of leadership as work to be done rather than as a particular kind of person doing the work changes the development perspective in several significant ways. First, work that needs to be done – even leadership work – can be accomplished in different ways, by different people, and by different kinds of people. When different initial conditions can result in similar outcomes, systems theorists label it equifinality. Rather than a contingency that matches a specific style (or person) with a specific job, equifinality suggests that the same leadership job can be accomplished by different people using a range of styles and traits. The development challenge, when viewed through this lens, is to identify what that range is, given a particular organizational context and value system. Second, knowledge of a range of effective styles or traits is not enough even when assessing an individual for development. In “doing the work” a person may compensate for a lack of some skills (e.g. make up for a lack of knowledge in finance by drawing effectively on the knowledge of others), acquire missing skills (e.g. learn enough finance to get by), substitute something else for the skill (e.g. outsource), or change the job so the skills are not so crucial (e.g. split off the financial component). Development for executive work means developing the ability to get the work done in a variety of different ways in consideration of, or in some cases in spite of, one’s own traits or skills. Third, leading is not about specific jobs. The content of jobs is changed by time and circumstances, and by the people in them. There is not a fixed target that a person is developed for. This is especially true of managerial jobs as one progresses up the hierarchy, and of managerial jobs in a global corporation. What
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is needed is a way of thinking about leadership that can accommodate a range of personal characteristics and is not limited by a fixed set of position characteristics, yet is not so abstract that it provides no meaningful guide for selection and development. One promising approach is to consider leadership as a job of creating a context in which other people can fully contribute to the organization’s mission. Viewing leadership in this way is sufficiently generic that it can be applied across levels in the hierarchy as well as across product, function and business lines. But where it is generic on the “what” dimension, it is more focused when it comes to the “how.” Leaders create context by making sure that everyone understands what they are trying to do and how they fit in; by influencing relevant parties to move in roughly the same direction – or at least not to block such movement; by “living” personal and organizational values; and by developing their own and others’ skills as is necessary to get the work done. But the real traction in this approach comes from the many levers available to leaders in achieving these conditions. Some of the levers can be moved by personal attributes (e.g. charisma can be used to align people), some require architectural manipulation (e.g. the way an organization is designed can influence alignment), and some are in the hands of other people altogether (e.g. rewards may be controlled by more senior management). The development challenge is not necessarily to change a person’s traits or style, but rather to help executives learn to identify and use a variety of approaches in meeting the demands of the job. Aspiring leaders will need to develop their understanding of themselves, so they can know how to use their gifts, how to compensate for their limitations, and how to develop new skills or improve weaknesses. But they also need to develop the ability to understand and diagnose the challenges of the job and how those challenges are shaped by the business strategy, and what the levers are that can get the work done – reward, process engineering, organizational design, and so forth. Viewing leadership as creating context puts a developmental premium on diagnostic skill directed at both self and situation. Such skill (a kind of expertise in itself) is highly dependent on experiences, the kinds that allow one to take measure of one’s self and the kinds that force one to face the demands of leadership. Given what is to be learned in these “rich” experiences and the critical nature of the learnings for development, intention becomes very important in who gets these experiences. Not everyone learns the lessons experience has to offer, so we must get the right people into the right jobs. There simply are not enough of these rich learning experiences to go around, and even if there were, an organization could never afford to ignore performance as a criterion for filling them. It is better to select those likely to learn the most and, in this case, the selection criteria might be threefold: sufficient intellectual capacity to understand complexity, openness to
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learning, and strong enough motivations to lead and to get results that will make learning how to do it more effectively a priority. In sum, we argue that executive development has for too long focused on developing people to meet an ill-suited and often unrealistic set of competencies and that has restricted the way we view development. By starting instead with the challenges in executive jobs, and by accepting that these challenges can be met in a variety of ways, the domain of development opens up. More energy can be directed to helping talented individuals (those smart enough, open enough and motivated enough) learn to achieve results rather than fit more closely an executive competency model.
A Different Understanding of Why People Change or Don’t, and What Development Means In light of thinking about achieving results rather than acquiring competencies, how do the most common development practices (Hollenbeck & McCall, 1999) stack up? If experience is the foundation of competence, then current HR practices fare none too well. Most large companies today publish online or in hard copy internal catalogs describing the development programs available to their employees and managers. Companies with more sophisticated systems link on-line assessment of competencies with their online programs designed to develop the needed competency. The most common “fix” is, of course, a training program, whether internet-or classroom-based, but those programs have limited potency in comparison to on-line job challenges, even when they use powerful tools like action learning, simulations, 360 feedback, and coaching. While HR struggles with competencies and training programs, job challenge is the mechanism most frequently used by the line organization to test and develop talent. Research evidence supports this approach (Hollenbeck & McCall, 2001; McCall et al., 1988; McCall & Hollenbeck, 2002), but too often job challenge is used inefficiently or, in search of efficiency, turned into formal rotational programs that rob it of its potency. Efficiency suffers when executives are thrown into challenging assignments without appropriate support or help, and as a result they founder, rely on already honed skills, or learn the wrong lessons. Formal rotation programs may ignore individual differences in already-existing ability and knowledge at the same time that they fail to recognize that the developmental strength of the rotation will vary greatly, depending on the business challenge and the context. We are often struck by how interested development officers are in the newest fad, program or speaker. But developing talent does not depend on inventing new training technologies or even on finding new principles of human development.
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The challenge lies in using the available knowledge and tools effectively to achieve a clear objective, in this case developing executives who can effectively meet the challenges facing the business. This begins by identifying challenges (not people), then works through identifying experiences (not programs) that might prepare people to meet the challenges, identifying the people who might learn from the experiences (not those who already know), developing mechanisms for getting those people into the experiences they need, and finally providing appropriate assistance to aid learning from the experience. If this process is carried out with an executive mindset, it naturally follows that people given these opportunities will be held accountable for taking advantage of them. Integration with the human resources perspective is essential to balance the results-orientation of the line executives. Getting results is crucial, but for people to develop they also need the perspective and the tools that will help them to take charge of their own learning. At the same time the organization has to understand that development of executive skills must start early and continue throughout a career. Performance may be measured annually, but tracking growth requires a much broader perspective. Development does not take place all at once or overnight, nor is it often linear. In sum, development must begin with a clear focus on business need and on experience as the driving force. Training and other tools are available to assist in the process, but the emphasis is clearly on the processes that determine who gets what experience and what is done to promote learning from experience. This, no doubt, requires a different configuration of human resources functions because succession planning, development, education, performance management, compensation, and other staff activities must be integrated for effective development to happen. It also suggests a very different role for line managers, who are ultimately accountable for the development process by virtue of their control over who gets what experience and what happens to them while they are getting it.
Stronger Linkages are Needed Between Development and the Business Strategy It follows from the preceding section that if development begins with business strategy, then there must be a direct linkage between strategic intent and the development process. While this sounds reasonable, it turns out not to be a natural act. The reason so many development programs are not taken seriously and disappear with the next cost-cutting cycle is that they are not seen as necessary to achieving business results. Indeed, developing talent is not always relevant to achieving short-term results and, in some industries or during some periods in
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an organization’s life cycle, may not even relate to longer-term results. It may be that in some situations selection is the preferred strategy or the only viable one. To make matters even more complicated, many organizations may not even have a business strategy, much less a clearly articulated one. Yet, theoretically, the business strategy, by virtue of the challenges that achieving it presents, dictates what experiences are important to developing leaders. In an ideal world, development is recognized as so important to the business that it is incorporated into the fabric of the organization. The most natural way for that to occur is to select leaders for whom development is a deeply held value, and therefore integrated not only into what they do but also into how they do it. But even when it’s not in their blood, most executives will accept the principle that developing leadership talent is important. The issue is not convincing them of the precept, but getting them to think of it as part of setting business goals. Even when the business strategy is only loosely formed or is stated only as a set of goals, there are ways to draw out the leadership implications as long as a goal can be translated into a developmentally relevant form. For example, what must an executive be able to do to generate a change in return on investment? What demands are created by entry into global markets? What kinds of challenges are created by underperforming businesses? Growing existing businesses? Mergers and acquisitions? Each of these issues creates leadership demands, and these in turn suggest the kinds of experiences talented people will need if they are to learn how to handle such demands in the future. Choosing who will get these strategically critical experiences presents another opportunity to integrate development into line decisions. Identifying talent and putting specific people into specific positions is the heart of the succession planning process in which most organizations are already engaged. Weaving development into the process requires only slight adjustments, such as identifying where the key experiences are and who would learn the most from them. There are several implications in this discussion of the linkage between development of talent and strategy. First, we are not talking about creating a human resources strategy based on the business strategy, and then figuring out how to do development. We are talking about embedding development directly within a more natural and central management process – the formulation of strategy and goals. This is not a separate session devoted exclusively to a discussion of high potentials or a review of the talent pool, but an additional question added to the development of business goals: “If this is what we are trying to do, what will our executives need to learn in order to do it? Where can they learn it?” There still may have to be a separate session to discuss “talent,” but now the nature of that session is framed by the question, “Who should get that experience?”
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The second implication of embedding development in strategic intent is that it transfers the decision-making role from HR to the line executives. After all, they are the ones who decide who gets what job, which is only half a turn away from “who gets what experience.” Finally, if an organization has no strategy to speak of, or has no goals that can be defined, then it probably doesn’t matter how development is carried out. This is not the situation, however, just because the future is uncertain or the strategy changes with a rapidly changing environment. This very uncertainty can be translated into specific demands that leaders face and used to identify the experiences that talented people need to operate in such a world.
A Redefinition of Top Management’s Role in Executive Development To say that top management support is crucial is to echo the long-standing sine qua non of human resource interventions. The appealed-for support ranges from relatively modest verbal endorsements to participation in extensive talent reviews. The wish list includes such things as teaching in development programs, allocating dollars and other resources, permission to engage in various activities, commitment to competency models, making training mandatory, providing rewards for development, coaching and mentoring, and a variety of other contributions. Former GE CEO Jack Welch’s commitment of 50% of his time to talent issues, capital investment in the Crotonville training facility, regular personal appearances at programs, and extensive talent review processes bring tears of envy to the eyes of many human resource executives. When senior management sees development as that essential to the business purpose, gaining their support for a laundry list of activities is relatively easy. Channeling that support into something productive is another matter. The more typical reality, however, is that senior executives will not show the zeal of a Welch when it comes to talent development, nor will they commit that much time to activities that support it. Even so, most executives will not deny the importance of having sufficient talent to keep the business viable, so the question is how to best leverage whatever active support the senior leaders are willing to give. With such a large menu of possibilities and genuine needs, and with limited commitment, what are the most important priorities? Perhaps it has been a mistake asking senior management to support development when what is really needed is their leadership of it. The very idea of support implies passive cooperation with someone else’s initiative. Yet if development of talent is critical to the business, line executives should drive it. By embedding development in the process of defining the strategic business context (as opposed to
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a human resources functional context) and consequently by framing it in executive terminology, it may be possible to get senior management’s commitment to at least the key roles of clearly defining the business strategy, treating developmental experiences as corporate assets, and modeling what is expected of others. As was discussed in an earlier section, if the reason executive talent is developed is to achieve business goals, then defining and clarifying those goals is crucial. For good business reasons as well as to establish a starting point for development, the first task for senior management is to define goals or, better yet, strategy, for the business, and to elaborate the leadership challenges implied by those objectives. They can then identify the experiences that might prepare people to meet those challenges. Once strategically key developmental experiences have been identified, the next step is to protect them. Now we are asking for a deeper level of commitment – suggesting that experiences (certain jobs, assignments, projects, and bosses, for example), and not just high potential individuals, are valuable corporate assets. As such, they should be under the direct control of senior executives and not the property of business units, functions or individual managers. Once again, we are trying to frame development within the purview of more traditional executive roles – in this case that of asset manager. From this perspective, the third major role for senior management has already begun if the first two roles have been achieved. That is, modeling expected behaviors. Through their attention to “who gets what experience” as a developmental choice point, they are already demonstrating what others should be doing. The next powerful action would be to undertake some developmental experiences for themselves. From there, it is a relatively small step to holding people accountable for their own development and that of their people. We called this section of the chapter redefining the role of senior management, but the role has been redefined only in the sense that it is shifted from one of support for development to one of leading development. The actions we have suggested are clearly leadership roles: establishing strategic direction, managing corporate assets, and modeling expected behavior. Perhaps having gone that far, senior executives may not see other activities like coaching or teaching as so great a leap. In any case, this much commitment can provide a strong foundation for the human resource professional to take charge of the rest of the process.
CONCLUSION In this chapter we have tried to show that executive development is not working as well as one might hope. We have identified some of the reasons for this unfortunate
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state of affairs, and, in light of those assertions, have suggested some changes in perspective that might open new avenues for the art and craft of development. The thrust of these suggestions has been to move away from an overly intense focus on individual attributes as the guiding force in development thinking and to consider instead the nature of leadership work. This makes it possible to consider multiple pathways to effectiveness and to pay more attention to what experiences talented people need, given their particular tapestries of strengths and weaknesses, if they are to meet the challenges facing them. This is precisely the thinking underlying an assessment approach based on “other people’s expectations” (OPEs) developed some years ago by Moses et al. (1993). Rather than ask for 360-degree assessments based on a list of competencies, they asked raters to consider specific but hypothetical situations and to assess how the person being rated might be expected to handle them. This procedure requires people knowledgeable of the ratee to mentally assess the whole of the person and to extrapolate how that person’s particular tapestry of strengths and weaknesses would play out in a defined context. This is, of course, much closer to the reality of managerial behavior. For example, one does not have the opportunity to judge another’s integrity except in situations that actually put it to the test; however, one can make educated guesses based on prior observations about how a person might react to a hypothetical situation in which personal integrity is an important issue. In short, it places the emphasis in development where it should be – on the acquisition of competence, not competencies. The suggestions we have made in this chapter are especially important for organizations trying to develop international and global executives. Because the global talent pool contains even more diversity in individual characteristics, doing business in different cultures requires different approaches, and global jobs come in so many different forms. Therefore, connecting business strategy to development, focusing on development through experience, and modeling expected behaviors are all the more important. At its core, however, development of talent is and has to be driven by the senior executives. When people at the top believe that developing talent is essential to business success and accept that proposition as a basic value (it has to be taken on faith), then what we have learned about how people develop can be invaluable in channeling that commitment productively. When the people at the top do not believe that development is important or simply pay lip service to it, the most sophisticated knowledge and refined tools ultimately will be of little value. As frustrating as that conclusion may be, it emphasizes in the long run how important selection really is. If the top decision-making positions are filled with executives who do not appreciate development or recognize how significant it has been and still is in their lives, then development becomes at best a guerrilla war carried on
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in pockets and in spite of an overwhelming force lurking in the background. It is indeed a leadership issue.
REFERENCES Barnard, C. I. (1972). The functions of the executive. Cambridge, MA: Harvard University Press. Bennis, W. (1989). On becoming a leader. Reading, MA: Addison-Wesley. Buckingham, M., & Coffman, C. (1999). First, break all the rules. New York, NY: Simon & Schuster. Charan, R., & Useem, J. (2002). Why companies fail. Fortune (May 27), 50–62. Collingwood, H. (2001). Leadership’s first commandment: Know thyself. Harvard Business Review, 79(11), 8. Gregorson, A. J., Morrison, A. J., & Black, J. S. (1998). Developing leaders for the global frontier. Sloan Management Review, 40, 1. Heifetz, R. A. (1994). Leadership without easy answers. Cambridge, MA: Belknap/Harvard University Press. Hollenbeck, G. P. (2001). A serendipitous sojourn through the global leadership literature. In: W. H. Mobley & M. W. McCall, Jr. (Eds), Advances in Global Leadership (Vol. 2). New York, NY: JAI/Elsevier Science. Hollenbeck, G. P., & McCall, M. W., Jr. (1999). Leadership development: Contemporary practices. In: A. I. Kraut & A. K. Korman (Eds), Evolving Practices in Human Resource Management. San Francisco, CA: Jossey-Bass. Hollenbeck, G. P., & McCall, M. W., Jr. (2001). What makes a successful global executive? Business Strategy Review, 12(4), 49–56. Kotter, J. P. (1988). The leadership challenge. New York, NY: Free Press. Kotter, J. P. (1990). A force for change. New York, NY: Free Press. McCall, M. W., Jr., & Hollenbeck, G. P. (2002). Developing global executives: The lessons of international experience. Boston, MA: Harvard Business School Press. McCall, M. W., Jr., Lombardo, M. M., & Morrison, A. M. (1988). The lessons of experience. Lexington, MA: Lexington Books. Michaels, E., Handfield-Jones, H., & Axelrod, B. (2001). The war for talent. Boston, MA: Harvard Business School Press. Mintzberg, H. (1973). The nature of managerial work. New York, NY: Harper & Row. Moses, J. L., Hollenbeck, G. P., & Sorcher, M. (1993). Other people’s expectations. Human Resource Management, 32(2 & 3), 283–299. Schein, E. (1996a). How top executives learn. A conversation with Ed Schein. Proceedings of the December, 1996 Meeting. Executive Development Roundtable, Boston University. Schein, E. (1996b). Three cultures of management: The key to organizational learning. Sloan Management Review, 38(1), 9–20. Sorcher, M., & Brant, J. (2002). Are you picking the right leaders. Harvard Business Review (February), 79–85. Spreitzer, G., McCall, M., & Mahoney, J. (1997). Early identification of international executive potential. Journal of Applied Psychology, 82(1), 6–29. Weick, K. (1969). The social psychology of organizing. Reading, MA: Addison-Wesley.
INTRODUCTION Peter W. Dorfman The five articles in this section of Volume 3 help us understand the extent to which national and/or corporate culture influences leadership processes. Viewed in their totality it is impressive that while all these chapters report the results of empirical research, each is theoretically based and will likely contribute to both the practice of global leadership as well as theory development. While the chapters vary in terms of theory development from the embryonic to the mature, they all contribute to our understanding of the intersection between culture and leadership. From my perspective, there are quite a few unexpected results. I was also struck by the variety of research topics and methodological approaches. Perhaps I should not have been surprised given the breadth of countries and employment bases of these scholars. They represent universities, institutes and multinational corporations in China, England, New Zealand, Holland, Korea, United States, Hong Kong, Singapore, and Switzerland. Two of the chapters view leadership from the perspective of personality-like characteristics. Jennifer Deal, Jean Leslie, Maxine Dalton and Chris Ernst examine the role of the leaders’ ability to adapt to other cultures in managing people of diverse backgrounds. A central finding in this study was that leaders who scored highest in terms of cultural adaptability were more likely to be identified by their bosses as high performers. Given this finding, the chapter discusses how companies can develop leaders through a combination of adult learning experiences. I was impressed by the rationality of their recommendations because they eschewed the usual endorsement of elaborate and costly cross-cultural training programs and opted instead for more practical experienced-based learning.
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The chapter by Wenquan Ling and Liluo Fang, focuses on Chinese leadership theory. They take an already existing behaviorally based theory, the “Chinese CPM Leadership Model” and integrate it with a model based on implicit leadership theory. In the CPM model, the “C” represents the moral Characteristic of a leader. The moral component of effective leadership was also a focus in the chapter by Hui and Tan in Volume 1 (Hui & Tan, 1999). The programmatic research described in the present chapter describes the development of a scale labeled the Chinese Implicit Leadership Scale (CILS). A central finding is that personal morality is a critical element of an ideal leader. This, of course, reinforces the importance of the “C” factor in the Chinese CPM leadership model. Taken together, these authors make a strong case for distinguishing between Western and Chinese models of leadership where the latter place stronger emphasis on the moral character of leaders than do their Western models. Two chapters examine the action-oriented processes by which leaders influence followers. The first chapter in this section by Jeffrey Kennedy, Ping-Ping Fu and Gary Yukl, directly examines the perceived effectiveness of various forms of influence process available to managerial leaders. This represents the largest cross-cultural study of influence tactics to date. As you might expect, there were some culturally-common findings. Some tactics were universally perceived as effective such as rational persuasion, consultation and collaboration. Others, such as gift giving, exerting pressure, and socializing prior to making a request, were considered to be relatively ineffective in all cultures. Given the large cultural differences among these diverse countries, I was surprised by the general similarity of rankings. Yet, cultural differences were important, but operated in a subtle manner. Specifically, the ratings of two influence tactics in particular, consultation and collaboration, were closely related to the cultural values of individualism/collectivism and power distance. These cultural dimensions are commonly believed to be extremely important for distinguishing the kind of leadership thought to be most effective in very different cultural environments (e.g. China in contrast to the United States). While I correctly guessed the sign of the relationship between these two tactics and one cultural dimension, my guess was incorrect for the other. You too might try to predict these relationships before reading the chapter! Overall, the implications of the study’s findings are important and should be comforting to corporate HR departments responsible for selecting leaders to manage globally. The overall consistency of findings across countries bodes well for the potential success of “newly designated” global leaders, particularly those who are currently successful. Even when placed in positions to provide “influence across national boundaries,” skills learned to influence others in one environment should transfer to other environments (given a moderate degree of cultural sensitivity and, as Deal et al. noted, cultural adaptability).
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Similar to the Kennedy, Fu and Yukl chapter, the third chapter in this section, by Peter Smith, also examines the action-oriented processes by which culture influences leadership. Smith continues his programmatic research on the Eventmanagement theory which was developed in collaboration with Mark Peterson (Smith & Peterson, 1988). According to this theory, leaders have a choice of alternatives to guide their behavior in making normal everyday management decisions. For instance, they can rely on formal rules and procedures, or rely on input from subordinates. The former is an example of relying on more hierarchical sources of guidance where the latter conveys more participative sources of guidance. This chapter presents evidence that clusters of nations can be identified with a distinctive profile of guidance sources (e.g. hierarchical versus participative; traditional versus non-traditional). Interesting contrasts are illuminated that present challenges for leaders working across national boundaries. The chapter presents wonderful examples to illustrate the more abstract contrast in profiles. A case in point is how managers of Nordic companies operating in China sometimes eschewed their preference to speak directly, but did so to give face to their Chinese counterparts. One important conclusion drawn from this research is that while cultural “values” (such as power distance or individualism/collectivism) may be useful to map cultural differences, the more concrete sources of guidance may be more important in assisting global leaders to guide real-world actions. In a very different kind of chapter, Daniel Denison, Stephanie Haaland and Paulo Goelzer investigate the importance of corporate culture as it relates to organizational success. The chapter fits in this series because the authors examine the influence of corporate culture across many countries to answer the following fundamental question – Is there a similar pattern of corporate cultures and effectiveness around the world? Rather than giving away the central finding, I would like to challenge you to make a prediction. Assume that you can reliably measure several elements of corporate culture that have proved important predictors of effectiveness in the West, such as defining core values of the firm, or articulating a clear vision for the company. Will the relationships between corporate culture and effectiveness hold across the world, or will unique elements of corporate culture prove to be the rule rather than the exception? We believe that the readers will find a number of surprises when reading the five chapters in this section since some findings are contrary to conventional wisdom. Other chapters confirm aspects of cross-cultural differences that most of “us” cross-cultural researchers hold dear. In totality, these studies contribute to understanding the process of global leadership within the intersection of individual, organizational and cultural contexts. Returning to the Chinese proverb and our metaphor about rowing the boat forward, these chapters should help global leaders
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row and guide the globalization boat smarter, with less effort, and in the right direction.
REFERENCES Hui, C. H., & Tan, G. C. (1999). The moral component of effective leadership: The Chinese case. In: W. Mobley, M. J. Gessner & V. Arnold (Eds), Advances in Global Leadership (Vol. 1, pp. 249–266). Stamford, CT: JAI Press. Smith, P. B., & Peterson, M. F. (1988). Leadership, organizations and culture: An event management model. London, UK: Sage.
INFLUENCE TACTICS ACROSS TWELVE CULTURES Jeffrey C. Kennedy, Ping-Ping Fu and Gary Yukl ABSTRACT This chapter summarizes our current knowledge regarding use of managerial influence tactics in international settings, and reports the findings of a twelve-nation study on the relative effectiveness of different influence tactics in business organizations. Rational persuasion, consultation, collaboration and apprising were identified as effective tactics in all the countries. Giving gifts, socializing with the target, exerting pressure, and making influence attempts informally were rated low in effectiveness in all of the countries. Discriminant analysis confirmed that patterns of perceived effectiveness for the influence tactics can distinguish countries in a manner consistent with their known cultural values.
INTRODUCTION Leadership is a multi-faceted concept, amenable to many different definitions. One of the few points of commonality among definitions is that leadership involves a process of exerting influence over a person or group. A major type of research on leader influence involves the identification of proactive influence tactics used by a leader to influence subordinates, peers and bosses. Influence tactics are, in a sense, the building blocks of more generic leadership styles, which vary across cultures
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in terms of how much they are used and their effectiveness (Chen & Fahr, 2001; Scandura, von Glinow & Lowe, 1999). The first taxonomy of influence tactics for organizational settings was developed by Kipnis, Schmidt and Wilkinson (1980), and a commercial version of their questionnaire, the Profile of Organizational Influence Strategies (POIS) (Kipnis & Schmidt, 1982) has been used in a number of research studies. Other researchers have proposed new tactics and reconceptualized existing tactics (see for example Schriesheim & Hinkin, 1990; Yukl, 2002; Yukl & Tracey, 1992).
Table 1. Definition of Influence Tactics Used in the Study. RP
RPW APP CONS INSP IGT EXC CLB PERS PRES COAL UP GIFT PST INF SOC
Rational Persuasion: The agent uses logical arguments and factual evidence to show that a proposal or request is necessary to attain task objectives and will benefit the organization. Written Explanation: The agent sends the target a memo explaining why the request or proposal is important for the organization. Apprising: The agent uses logical arguments and factual evidence to show that a proposal or request will benefit the target personally. Consultation: The agent seeks target input or active participation in planning a strategy, activity or change for which target support and assistance are desired. Inspirational Appeals: The agent makes an emotional appeal to the target’s values and ideals during a request or proposal. Ingratiating Tactics: The agent uses praise and flattery, or expresses confidence in the target during the influence attempt. Exchange Tactics: The agent offers to do something for the target in exchange for doing what the agent wants. Collaboration Tactics: The agent offers to provide resources and assistance, or to share the benefits if the target will carry out a request or approve a change. Personal Appeals: The agent asks the target to carry out a request or support a proposal out of loyalty or friendship. Pressure Tactics: The agent uses demands, threats, frequent checking, or persistent reminders to convince the target to do something. Coalition Tactics: The agent enlists the aid of others, or uses the support of others who are close to the target person, to influence the target to do something. Upward Appeal: The agent seeks help from someone who has higher authority over the target. Gift: The agent gives small gifts to the target person or his/her family prior to making a request. Persistence: The agent repeatedly asks the target to carry out a request or support a proposal in an effort to overcome the target’s initial resistance. Informal Approach: The agent takes the target person to a non-work setting (home, restaurant or other place) to make the influence attempt. Socializing: Before making a request, the agent talks about a subject that is irrelevant to the request but of interest to the target person (such as family, children or sports).
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Most research on influence tactics has its origins in the U.S., and it has relied on measures developed in that country (Yukl, 2002). Effective leadership in a global context requires an examination of the extent to which the findings of such research can be generalized to other nations and cultures. Two broad questions must be answered if we are to be able to extend our knowledge of influence tactics into the global arena. First, does the repertoire of influence tactics derived from studies of U.S. managers also apply to managers in other countries? That is, can we use the same set of tactics to describe the behavior of managers in other countries? Second, do the tactics work in the same way in all countries, or is their effectiveness affected by cultural variables? Even though much of the published literature on influence tactics represents research carried out in the United States, more studies from other countries are now beginning to appear. In this chapter we report on the largest cross-cultural study to date. We collected data from managers in twelve different countries on the 16 influence tactics defined in Table 1. Before describing this study, we will summarize prior research on the use of influence tactics in different countries.
LITERATURE REVIEW While important distinctions can be drawn between “nation” and “culture” (Earley & Singh, 1995), most international studies of influence tactics have tended to use national origin as the basis for determining cultural groupings. Some studies are primarily concerned with identifying the tactics used by people in a particular country, whereas other studies compare two or more countries in terms of how often each type of tactic is used or the relative effectiveness of tactics in each country. Both types of studies will be reviewed. Influence Tactics Used in Different Countries An important issue in cross-cultural research on leadership is the extent to which specific influence tactics identified in the U.S. are also relevant for other countries. One type of research on this question is comparison of results from factor analysis of influence tactic questionnaires administered to managers in different countries. Factor analyses of POIS responses by samples of Australian, English, Taiwanese, and Japanese managers yielded tactics similar to those found in the original development of the questionnaire in the United States (Schmidt & Yeh, 1992). Likewise, Rao, Hashimoto and Rao (1997) found that assertiveness, sanctions and appeals to higher authority had the same meaning for Japanese managers in their study as they did for American managers in earlier studies (Kipnis et al., 1980).
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More rigorous assessment of the measurement invariance of the POIS across cultures would lend more weight to these studies (Vandenberg & Lance, 2000). Krone, Chen and Xia (1997) used interviews rather than questionnaires to identify the influence tactics used by factory directors in the People’s Republic of China. Content analysis of the interviews identified use of assertiveness, rational persuasion, sanctions, and consultation influence tactics. Beyond these initial similarities, however, researchers have identified important differences in the perception of tactics across countries. For example, Krone et al.’s (1997) factory directors’ descriptions of “rationality tactics” revealed an underlying “consciousness-raising process which reflects and reinforces interrelated cultural values and political ideology” (p. 312). Relevant cultural values included group-centeredness, hierarchy and concerns for face. For example, one factory director (describing his approach to a tardy employee) said he would say: “You should have the spirit of loving the factory as your own family” (p. 304) while another would argue for the importance of maintaining “a sense of care and a sense of collectivity” (p. 304). Political ideology was reinforced by reminders that workers were “all masters of the factory,” or, as one director expressed it: “The employee is the owner of the organization. I am giving him an education in proper ownership spirit” (p. 308). Further examples of subtle differences in the interpretation of tactics come from the factor analytic studies cited above. Japanese managers in Rao et al.’s (1997) study commented that the “POIS items were too specific” and “American” and that they “influenced their subordinate in less obvious, more indirect ways” (p. 303). Furthermore, a high correlation between exchange tactics and friendliness suggested that the Japanese managers did not distinguish these tactics in the same way as American managers. Rao et al. (1997) also asked their Japanese respondents to describe additional tactics not included in the POIS. Content analysis of the responses suggested the existence of a number of culturally-specific tactics, including: reliance on the firm’s authority; linkage to skill development and career development within the firm; open communication of information; acting as a role model in the expectation that subordinates will follow the manager’s example; and using social settings (e.g. meeting in a bar after work) to communicate requests in a frank, assertive manner. Rao et al. argue for the existence of important differences that are likely to limit the effectiveness of these tactics in non-Japanese contexts. However, some of these tactics have also been identified in research with American, Swiss and Chinese managers (Fu & Yukl, 2000; Yukl, Fu & McDonald, 2003). The studies reviewed up to this point all focus on proactive influence tactics, but subordinates will often carry out a task on the basis of a simple request, which is not usually treated as a proactive tactic (Yukl, Falbe & Youn, 1993). Pasa
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(2000) used critical incident analysis with a small management group in Turkey (a country characterized by high power-distance and collectivism) to elicit examples of downward influence tactics. The most frequently identified tactic for influencing subordinates was a simple request merely identifying the task to be done. Differences in the “base rate” of simple request behavior in different cultures are likely to influence the interpretation of more proactive tactics but we currently know very little about differences between cultures in this regard.
Cross-cultural Research on Tactic Use or Effectiveness Several studies have compared responses of managers from two or more countries to some measure of influence tactic use or perceived effectiveness. A common practice in such research is to infer differences in cultural values such as power distance, individualism-collectivism or uncertainty tolerance. Schermerhorn and Bond (1991) found that Hong Kong Chinese expressed a greater preference for use of assertiveness than did Americans, who preferred ingratiation, rationality and exchange. Schermerhorn and Bond suggested that power distance might account for these differences. Use of assertive tactics in a low power distance culture (such as in the United States) may engender greater resentment than in a high power distance culture. Even if the outcome is successful (i.e. the target complies), the cost (feelings of resentment) may be considered too high for the tactic to be considered useful for most influence attempts. Fu and Yukl (2000) carried out two studies. The first study involved U.S. and Chinese managers working (in their country of nationality) for the same multinational corporation, while the second study included managers from a wider range of industries, companies and management levels. For both studies, the rank ordering of tactics (according to expected effectiveness) was very similar across the two countries. Rational persuasion was considered the most effective tactic, and the least effective tactics were pressure and the use of small gifts. In terms of numerical ratings, the Americans gave significantly higher ratings to rational persuasion and exchange than the Chinese, while the Chinese managers gave higher ratings than Americans to coalition tactics, upward appeals and use of gifts. The researchers interpreted their findings as being consistent with established cross-cultural differences between the two countries. Such differences include the American preference for more direct confrontation and use of reasoning to influence, and the Chinese cultural tradition of gift-giving and use of indirect approaches for controversial requests. Dorfman (1996) has argued for the importance of including a broad range of variables in international leadership research, including religion, language, history
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and political systems. Other possible determinants of influence behavior include the organizational culture, the level of economic development, and the political system of the nation. Several studies of influence tactics have referred to such variables in attempts to explain their findings. Ralston et al. (2001) go beyond cultural values to consider the importance of political structures and economic development as possible explanations for observed differences in the acceptability of influence tactics in different countries. In their comparison of managers from Germany, Hong Kong, India, Mexico, the Netherlands and United States, they found general agreement across countries regarding the relative acceptability of “hard” tactics (Information Control and Strong-Arm Coercion) and “soft” tactics (Good Soldier and Image Management). Within this consistency, however, several differences were noted. U.S. and Dutch managers gave the highest acceptability ratings to the soft tactics, followed by the German and Indian managers. The Hong Kong and Mexican managers viewed soft tactics as less acceptable. The reverse pattern was evinced by responses to hard tactics; Hong Kong and Mexican managers (while rating them negatively) found these items to be more acceptable than did other managers, while U.S. and Dutch managers rejected them most strongly. Ralston et al. (2001) suggest that similarity in the Dutch and American ratings are due to the similarity of the two countries (i.e. scores in the same quartiles) across the cultural dimensions of power distance, individualism-collectivism and Confucian dynamism (Hofstede & Bond, 1988). In considering the underlying reasons for similarity in ratings made by Hong Kong and Mexican managers, the authors discuss cultural variables but also suggest that economic and political variables may be relevant. Pressures for economic development and a long-term experience of non-democratic rule may make “hard” influence tactics more acceptable in these nations. Yukl et al. (2003) also suggested that factors such as economic development may need to be considered alongside cultural values in gaining a fuller understanding of international variation in the use and effectiveness of influence tactics. The researchers asked managers to read two scenarios (one requiring use of upward influence tactics to gain approval for an organizational change initiative and one involving influence tactics aimed at resisting a change initiative from a superior). Managers then rated the likely effectiveness of specific influence tactics if used in the scenarios. One study compared Chinese, U.S. and Swiss managers and a second compared U.S., Chinese and Hong Kong managers. In general, the U.S. and Swiss managers gave similar ratings, and considered direct, task-oriented tactics (such as rational persuasion, inspirational appeals and oral objections) to be more effective. The Chinese managers gave higher effectiveness ratings to behaviors involving personal relations, an informal approach and avoidance of
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confrontation. The ratings of Hong Kong managers were closer to U.S. managers for most influence tactics, but closer to the Chinese managers for some other tactics. Yukl et al. (2003) note that the results reflect the common Chinese cultural heritage of the Hong Kong respondents as well as Western values acquired during Hong Kong’s history as a former British colony (with its Western economic, educational and legal systems). Most cross cultural studies assume that the cultural backgrounds of the agent and target person are the same. However, sometimes the target person is from a different culture than the agent. It may be more difficult to use some of the influence tactics effectively with targets from another culture, especially if the agent is not fluent in the native language of the target person. Rao and Hashimoto (1996) investigated the influence tactics used by Japanese expatriate managers in Canada, and the extent to which the pattern of tactics used varied according to whether the target subordinate was Canadian or Japanese. The managers made more frequent use of assertive tactics with Canadian subordinates than with Japanese subordinates. This difference appeared to be partly the result of the managers’ lack of fluency in English. Finally, differences in organizational culture may enhance or reduce the effects of national culture (House, Javidan, Hanges & Dorfman, 2002). Yeh (1995) studied Japanese, U.S. and Taiwanese managers working in Taiwan-based subsidiaries of Japanese and U.S. multinationals. He compared the downward influence strategies used by Japanese and Taiwanese managers in Japanese subsidiaries with the strategies used by U.S. and Taiwanese managers in U.S. subsidiaries. The rank order of frequency of use of tactics within each of the two types of subsidiary was the same for both expatriate and local (Taiwanese) managers, but the order was different for the U.S. and Japanese subsidiaries. Assuming a similarity of societal cultural values across the two sets of Taiwanese managers, the observed differences indicate that organizational culture and structure (perhaps in themselves partially determined by national cultural values) act to shape managerial influence behavior.
Summary and Evaluation of Prior Research On the basis of the evidence summarized above, we can conclude that many of the influence tactics derived from U.S. studies are also applicable in other countries. Subtle differences exist however, and more rigorous examination is needed to clarify them. Furthermore, some tactics (e.g. gift giving) may be very culturally-specific and less widely used. A few tactics have been found to be relatively effective across countries. For example, rational persuasion is the most
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frequently used tactic in all countries and the one considered most effective by managers regardless of country. Pressure tactics and appeals to a higher authority were consistently rated as least frequently used or least effective across countries. In considering the effect of cultural variables, most researchers have tended to make post-hoc suggestions, attributing observed differences in tactic ratings to inferred differences in cultural or national variables. A major limitation of the prior studies was the fact that none of them actually measured cultural values for the managers used in the study. At times, contradictory assertions have been made. Ralston et al. (2001) suggest that Dutch and U.S. tactic ratings were similar because they share the same quartiles on Hofstede dimensions; Rao et al. (1997) argue that differences between power distance for Japan and U.S. explain some of their results, even though Japan and U.S. are also in the same quartile for power distance (Hofstede, 2001). Another weakness of the prior studies is that few of them compared a wide range of potentially relevant tactics across a broad representation of different countries. Only one study used more than four countries (Ralston et al., 2001), and the majority of studies used three or fewer countries. Accordingly, the findings of similarities and differences can only be treated as suggestive.
OBJECTIVES OF OUR STUDY In our own research, we use a larger sample of countries and a more diverse set of influence tactics, to explore the extent to which such findings can be generalized. The following research questions are addressed: (1) Are there tactics for influencing others that are universally accepted as effective across cultures? (2) Are there tactics for influencing others that are universally considered ineffective across cultures? (3) Can the ratings of influence tactic effectiveness distinguish participating cultures in a manner consistent with past studies of cultural values and country clusters?
METHOD Samples Data was collected from managers in China, France, Hong Kong, India, Japan, Mexico, Netherlands, New Zealand, Taiwan, Thailand, Turkey and the United
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Table 2. Demographic Characteristics for Participating Countries.a Countries
Age
Males
Educationb
Job Type
Industry
Firm Size
China (N = 163) France (N = 184) Hong Kong (N =104) India (N =184) Japan (N = 118) Mexico (N = 181) Netherlands (N = 155) New Zealand (N = 184) Taiwan (N = 129) Thailand (N = 152) Turkey (N = 106) U.S. (N = 103)
35.8 42.4 34.4 37.3 42.3 35.9 42.7 42.4 39.6 35.8 36.6 36.6
75 70 58 92 99 66 89 72 81 59 67 55
2 1 2 2 2 2 3 2 2 2 2 2
1 4 4 3 4 1 1 3 3 2,4 4 4
1 1 1 2 1 2 4 1 1 1 4 2
2 1 1 3 (Missing) 1,3 2 2 3 2 2 2
a Although not a separate country, Hong Kong’s different developmental trajectory argues for its inclu-
sion as a sample separate from China. the exception of age (where the mean is reported) and “Males” (the percentage of male respondents), the table shows the most frequently noted response category, coded as follows: education – (1) post graduate, (2) university or equivalent, (3) high school or equivalent, (4) below high school; job type – (1) general administration, (2) finance, (3) Production/Manufacturing/Operations management, (4) sales management; industry – (1) manufacturing, (2) financial services, (3) telecommunications, (4) other; firm size – (1) less than 100; (2) 100–1,000; (3) over 1,000. b With
States. While Hong Kong is a region of China, its unique economic and political history warrant it being treated separately, and for ease of discourse we refer to it as a country. Summaries of the demographics of the respondents are provided in Table 2. The average age ranged from 34 to 43, with the average age of the Hong Kong managers being the lowest and Netherlands managers the highest. The majority of respondents were male, but in Hong Kong, Thailand and the U.S., females comprised over 40% of the sample. In five countries (India, Taiwan, Thailand, Turkey and the U.S.) over 90% of the sample had university undergraduate or graduate qualifications; in only three countries (France, Netherlands and New Zealand) did this percentage fall below 70%. Manufacturing and financial jobs were the most reported job types. Almost half of the Hong Kong participants were from small firms (less than 100), but all other countries had a majority of managers from either medium-sized (100–1,000) or large firms (over 1,000). Measures The influence tactics were measured using a scenario-based questionnaire, the framework of which was developed in the Fu and Yukl (2000) study. The
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questionnaire contained six scenarios. Each described an influence situation that a manager could reasonably expect to encounter at work, and the influence objective was explicitly stated. Two scenarios described a situation in which a manager needed to influence his superior; two required a manager to influence a peer manager, and the other two involved a manager trying to influence his subordinate. The agent and target described in the scenario were always the same sex (male) in order to control gender effects on ratings of influence tactics. The choice of male gender also reflects the predominately male composition in most of the work places. The first scenario, for example, reads as follows: The Marketing Manager wants to assign a new task to one of his subordinates. The task is to conduct a survey to obtain customer opinions about the services provided by the company. The survey is the marketing department’s part of a new initiative by top management to improve customer service. The subordinate is reluctant to do the additional task because his other job responsibilities are already overwhelming.
At the end of the scenario, we listed 16 influence tactics tailored to the given situation and asked respondents to rate how effective each of the tactics listed would be if used for influencing the target person to accomplish the objective described in the scenario. A five-point rating scale was used with the following anchors: 1 = completely ineffective, 2 = slightly ineffective, 3 = slightly effective, 4 = moderately effective, 5 = very effective. Definitions for the tactics were provided earlier in Table 1, together with the abbreviations we have used in reporting some of the results of our study. Most of the tactics come from previous research using questionnaires, influence incidents or fixed-response scenarios, but a few additional tactics were suggested by responses to open-ended scenarios in a pilot study conducted with managers from each country. The original English version of the scenario questionnaire was used in India, New Zealand, Thailand and the United States, with minor modifications to fit local terminology and spelling. A translated version of the scenario questionnaire was used for the remaining countries. Consistent with the recommended procedure, (Brislin, 1970) two bilingual persons familiar with the behavioral literature made the initial translation from English to the language of the country. A different person retranslated the questionnaire back into English. Finally, another bilingual person checked the back-translated version against the original English to ensure that they were equivalent. Any discrepancies were resolved by discussion among the researchers.
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RESULTS Scale Means and Reliabilities Table 3 shows the means and reliabilities for the sixteen influence tactic scales. Each of these scales had six items (one from each scenario), and for the total sample (N = 1628) the alpha coefficients ranged from 0.66 (coalition and pressure) to 0.87 (socializing) with only three tactics (coalition, exchange and pressure) falling below 0.70. Thus, for the overall sample there was moderate internal consistency in the perceived effectiveness of each tactic across scenarios, despite differences in the direction of influence, the influence objective, and other aspects of the influence context known to be relevant for tactic effectiveness (see Yukl, 2002).
Universally Effective Tactics In order to assess the extent to which influence tactics are considered universally effective or ineffective, we determined the relative rankings of tactic effectiveness within each country, and then compared these rankings across countries. Table 4 lists the five tactics rated as most effective within each country and the five tactics rated as least effective. Rational persuasion, consultation and collaboration were universally rated as effective tactics, appearing in the top-five lists of all countries. Apprising was ranked in the top five by all countries except the Netherlands.
Universally Ineffective Tactics Gift-giving, socializing, use of an informal setting and the use of pressure were perceived as relatively ineffective tactics and ranked in the bottom five tactics for all twelve countries. Personal appeals were also seen as generally ineffective and ranked in the bottom five in 11 of the 12 countries. It’s possible that the nature of the scenarios contributed to the low ratings for some of these tactics. The scenarios all involved immediate work-related requests, whereas tactics such as gifts and socializing seem more useful for building relationships that will facilitate compliance with requests at a future time. This possibility is illustrated by one of the Chinese respondents who made a narrative comment on one of the scenarios: “Further improve personal relations. If necessary,
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Table 3. Mean Scoresa and Reliabilities of Influence Tactic Scales.b Countries
China France Hong Kong India Japan Mexico Netherlands New Zealand Taiwan Thailand Turkey U.S. a For
APP
CLB
COAL
CONS
EXC
GIFT
IGT
INF
INSP
PERS
PRES
PST
RP
RPW
SOC
UP
1628
0.74
0.72
0.66
0.78
0.69
0.83
0.78
0.74
0.73
0.79
0.66
0.79
0.79
0.84
0.87
0.79
163 184 108 184 118 178 155 187 129 152 106 103
3.1 3.3 3.4 3.6 3.0 3.2 2.8 3.2 3.4 3.4 3.5 3.5
3.0 3.8 3.2 3.4 3.2 3.0 3.6 3.7 3.2 3.3 3.5 3.6
2.2 2.6 2.5 2.3 2.2 2.1 2.4 2.3 2.5 2.5 2.3 2.6
2.8 3.6 3.2 3.7 3.1 3.2 3.6 3.9 3.0 3.5 3.7 3.5
2.5 2.8 2.7 2.6 2.4 2.5 2.5 2.7 2.5 2.6 2.3 3.0
1.7 1.4 1.5 1.7 1.3 1.8 1.3 1.5 1.8 1.7 1.6 1.7
2.6 3.2 2.8 3.5 2.7 2.7 2.9 2.7 3.0 3.1 3.4 3.0
2.2 1.9 1.8 2.1 1.4 2.0 1.7 1.6 2.1 1.8 2.0 1.9
2.5 3.3 2.8 3.3 3.5 3.0 3.0 2.8 3.1 3.1 3.4 3.1
2.1 1.8 2.0 1.9 1.8 1.8 1.7 1.8 2.2 2.0 1.5 1.9
1.7 2.2 2.0 1.9 1.8 2.0 1.9 1.4 1.8 2.0 1.6 1.9
1.8 2.4 2.0 2.3 2.4 2.1 1.7 1.5 2.2 2.1 2.0 2.0
3.0 4.0 3.5 3.8 4.1 3.5 3.5 3.6 3.3 3.8 4.2 3.7
2.7 3.0 2.8 2.7 2.8 3.0 2.4 2.4 2.8 3.1 3.3 3.0
1.7 1.4 1.7 1.7 1.4 1.9 1.5 1.3 1.9 1.8 1.8 1.7
2.7 2.6 2.8 2.7 2.8 2.1 2.6 2.4 2.8 2.9 2.5 2.8
table clarity, standard deviations are not shown. The median values of standard deviation for the twelve countries ranged from 0.55 (PRES) to 0.78 (RPW). b Each scale comprises six items, one from each scenario. c Coefficient alpha.
JEFFREY C. KENNEDY, PING-PING FU AND GARY YUKL
Reliabilityc
N
Rank
China
France
Hong Kong
India
Japan
Mexico Netherlands
1 2 3 4 5 12 13 14 15 16
APP RP CLB CONS UP PERS PST SOC GIFT PRES
RP CLB CONS INSP APP PRES INF PERS GIFT SOC
RP APP CLB CONS UP PRES PERS INF SOC GIFT
RP CONS APP IGT CLB INF PRES PERS SOC GIFT
RP INSP CLB CONS APP PRES PERS INF SOC GIFT
RP CONS APP INSP CLB PRES INF SOC PERS GIFT
a Based
CONS CLB RP INSP IGT PST INF PERS SOC GIFT
New Zealand
Taiwan
Thailand
Turkey
USA
CONS CLB RP APP INSP INF PST GIFT PRES SOC
APP RP CLB INSP CONS PST INF SOC GIFT PRES
RP CONS APP CLB RPW PRES PERS INF SOC GIFT
RP CONS APP CLB IGT INF SOC GIFT PRES PERS
RP CLB APP CONS INSP PERS PRES INF GIFT SOC
Influence Tactics Across Twelve Cultures
Table 4. Tactics Rated Most and Least Effective by Each Country.a
on means of six-item scales, with rank of 1 representing the highest rating for likely effectiveness.
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take him to dinner, give gifts, etc.” A New Zealand respondent gave an opposite view, writing that he had not rated any of the gift-giving items because “these may be completely inappropriate, as opposed to ineffective.”
Discriminant Analysis of Country Ratings We used discriminant analysis to answer our third research question on the extent to which the ratings of influence tactic effectiveness could distinguish countries in a manner consistent with past studies of cultural values. This statistical technique seeks to find combinations of predictor variables (the sixteen six-item influence tactic scales) that maximally discriminate between managers from the different countries. Each combination of variables is called a “discriminant function.” Using the complete sample to derive the discriminant functions would overestimate the accuracy of discrimination, as the analysis capitalizes on sample error to create functions which would be more accurate for the sample than for the full population (Klecka, 1980). We therefore split the sample randomly in half. One subset was used to derive the classification functions (analysis sample), and the other was used to test the accuracy of classification (holdout sample). Random assignment of the individual managers to the twelve countries would result in an expected accuracy of around 8.3% (increasing to 11.1% if all managers were allocated to the largest group in the holdout sample, India). By comparison, 43.1% of managers in the holdout sample were correctly classified by the discriminant functions derived from the analysis sample. This finding greatly exceeds the pragmatic criterion suggested by Hair et al. (1995) of a 25% increase in predictive accuracy over that expected by chance, and results in a significant value for Press’s Q statistic (Q = 1444.5, p < 0.001). In many cases, the discriminant functions assigned misclassified cases to countries in the same societal cluster (Gupta, Hanges & Dorfman, 2002). For example, while 53% of Chinese respondents in the holdout sample were correctly classified, the two largest sets of misclassifications were assigned to Taiwan (11%) and Hong Kong (6%) – both members (with China) of the Confucian Asia cluster. Similarly, Taiwan (42% correct classifications) had 21% of its managers misclassified as coming from China, and 8% as coming from Hong Kong. Thailand had the least accurate classification rate in the holdout sample (24%), and the largest number of misclassifications went to the other southern Asia cluster country in the sample, India (14%). Hong Kong stood out as somewhat of an anomaly. Although 25% of Hong Kong managers in the holdout sample were correctly classified, and a further 20% were allocated to China and Taiwan, the largest misclassification was to the
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U.S. (21%). This finding is consistent with Yukl et al.’s (2003) finding of high similarity between Hong Kong and U.S. managers’ ratings of influence tactics, and highlights the need for caution when generalizing findings from research on Hong Kong samples to other Asian countries. The first canonical discriminant function accounted for just over 29% of variance, and inspection of the structure matrix for the complete sample revealed only two tactics with loadings higher than 0.4 on this function. The two tactics were consultation (0.46) and collaboration (0.41). Given the ability of this function to separate out countries according to influence tactics, it is reasonable to ask whether the ordering of countries on this function mirrors distinctions between countries based on cultural value typologies. Consultation, as an influence tactic, seeks to gain target commitment to a course of action already decided by the agent, albeit with the possibility of some minor amendments based on target input. In high power distance countries, subordinates feel unable to disagree with superiors, and lose respect for managers who ask for advice before making a final decision (Hofstede, 2001, pp. 86 and 90). Accordingly, we would expect the discriminant function to be negatively correlated with power distance. Power distance is related to individualism/collectivism, and the two values interact when it comes to the exercise of power (Hofstede, 2001, p. 218). The perceived effectiveness of consultation and collaboration tactics is likely to vary according to whether the actors involved belong to the same or different in-groups. In an individualist society, the “in-group/out-group” distinction is less pronounced, and managers are more likely to expect consultation to be effective in gaining commitment across a wide range of social settings, including influence attempts across departmental and hierarchical boundaries. Managers from collective cultures will Table 5. Correlations between the First Canonical Function and Measures of Power Distance and Individualism/Collectivism. PDIa Canonical Function Canonical Functionc ∗ Significant
−0.71∗∗ 0.12
PD(G)b
IDVa
C-II(G)b
−0.53∗ 0.27
0.86∗∗ 0.72∗
−0.90∗∗ −0.80∗∗
at the 0.05 level (one-tailed); ∗∗ significant at the 0.01 level (one-tailed). power distance index (PDI) and individualism index value (IDV) (2001, Ex. 3.1 and Ex. 5.1); N = 11 as value for China not available. b GLOBE measure of power distance (PD(G) and Collectivism II (C-II(G)), as defined in House et al. (1999, p. 193); N = 12. c Second-order partial correlations with PDI and PD(G) after partialling out the effect of IDV and C-II(G), and with IDV and C-II(G) after partialling out the effect of PDI and PD(G); df = 7. a Hofstede’s
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evaluate likely effectiveness in regard to the quality and strength of existing relationships between actor and target. We would therefore expect a positive correlation between the first canonical discriminant function and individualism. Correlations between country values on the first canonical discriminant function and GLOBE and Hofstede measures of power distance and individualism/collectivism are reported in Table 5. All correlations are in the expected direction, and are significant. As these two cultural values are correlated, partial correlations are reported in the second row of the table and they indicate that the cultural dimension of individualism/collectivism has the strongest relationship to the discriminant function, sharing over 50% of common variance.
DISCUSSION Our study provides support for the view that some tactics are likely to be similarly effective in a diverse range of cultures (Table 4). Four tactics in particular stood out as being near the top of each country’s rankings. These tactics include rational persuasion, consultation, collaboration, and apprising. Rational persuasion (made directly rather than in a written message) is equally useful for influence attempts in all three directions. The other three tactics are more useful for influencing peers and subordinates than for influencing bosses. At the other end of the rankings, four tactics stood out as relatively ineffective in all of the countries. These tactics include pressure, giving small gifts prior to making a request, socializing prior to making a request, and making the request in an informal setting rather than at the work site. In most of the countries, making a personal appeal to the target was also viewed as a relatively ineffective tactic. Despite the similarity in rankings across countries, individual ratings of tactics differed in ways that are consistent with broader cultural values. In particular, the cross-cultural differences in ratings of consultation and collaboration are closely related to the cultural values of individualism and power distance. Leaders in cultures characterized by low power distance and high individualism considered these tactics to be more effective than did managers from other cultures.
Advantages of the Study Our research has a number of advantages in comparison to much of the prior research on the same topic. We included more tactics and a broader range of tactics than any prior study. The scenario method used in our research seems less susceptible to problems of social desirability bias and ambiguity than the traditional
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type of survey questionnaires used in many of the prior studies. As in the study by Fu and Yukl (2000), we conducted a pilot study with a small sample of respondents from each participating country to ensure that the scenarios and tactics attached to them were relevant and clearly understood. The relative effectiveness of each tactic was used in addition to mean ratings to ensure that national differences in response tendency (e.g. avoidance of extreme ratings) did not distort the results. Finally, we conducted a discriminant analysis to determine the extent to which the findings can classify managers accurately by country and type of culture.
Limitations of the Study Despite the advantages, our study also had some limitations. Our scenarios did not take into account all potentially relevant contextual variables, such as the type of personal relationship (e.g. friendship, impersonal or antagonistic) between the agent and target, or the history of prior interactions between them, both of which may be important determinants of reactions to influence tactics. In future studies it may be useful to incorporate more information about the relationship between the agent and target and prior history relevant to the influence attempt. Another important aspect of the context may be the type of job held by the target person. A variety of functions (e.g. sales, research and production) were used in our scenarios, but we did not systematically counterbalance function with the direction of influence or influence objective. In one of our scenarios, a manager desired to influence sales representatives to increase their sales of a new product. In all twelve countries, exchange (i.e. offering an extrinsic reward) was the tactic rated most effective for accomplishing the influence objective. Narrative comments by respondents indicated that stereotypical perceptions of sales representatives influenced them to give higher ratings for exchange in this scenario than in the other ones. This occupational stereotype appeared strong enough to transcend all cultural differences. Thus, it may be desirable to include type of job or function as an explicit contextual variable in future studies. The scenario method used in our research has a number of limitations. First, perceptions of tactic effectiveness may not reflect actual use of the tactics in situations similar to the scenarios. Future research with multiple methods is necessary to determine the extent to which perceived effectiveness is reflected in actual influence behavior. For example, the perceived effectiveness of each type of tactic could be compared to reported use of the tactic by target persons (e.g. subordinates, peers and bosses). It is also important to determine the extent to which perceptions of tactic effectiveness correspond to their actual effectiveness in each culture. The tactics rated most effective in the United States are mostly
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consistent with findings in other research on tactic effectiveness in the U.S. (see Yukl, 2002), but perceptions may not be as consistent with reality for all countries. A second limitation of the scenario questionnaire is that respondents rated each tactic individually. These ratings did not allow respondents to indicate preference for a sequential or conditional use of the tactics. Narrative comments from some respondents sometimes revealed that a particular tactic might be considered effective only after other tactics had been used, or in combination with them. A third potential limitation of the scenarios is the possibility that effectiveness was not interpreted the same way in different countries. Some respondents may consider a broader range of consequences when evaluating effectiveness. For example, some respondents may perceive a tactic as effective if it will elicit the desired action (compliance) regardless of any negative side effects (e.g. for trust or friendship), whereas other respondents may consider a tactic effective only if it results in target commitment without adverse side effects. Future research should investigate this possibility. Cultural values have been used to explain cross-cultural differences in use of influence tactics or their perceived effectiveness, but as noted earlier, no study (including ours) actually measured the cultural values of the participating managers. A sample of managers from a country can have values that differ in significant ways from the modal values traditionally emphasized in their country, especially when the country has been experiencing rapid economic development or political change. In future research, values should be measured directly for each sample of managers used in a cross-cultural study. Finally, as in most earlier studies, we did not attempt to measure organizational culture, which in some contexts may be more important than national culture or ethnic background in determining a manager’s influence behavior (Yeh, 1995). An organization’s culture may differ in important ways from the national culture, especially if the organization is a subsidiary of a foreign company or has extensive global operations. There is a need for research to disentangle the effects of national culture, organizational culture and individual variables.
Practical Applications The results from this type of cross-cultural research have some important practical applications. A manager is more likely to be effective if he or she has a good understanding of the range of available influence tactics and the conditions that determine how effective they are likely to be. Managers need to know which influence tactics are likely to be effective for influencing people from many
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different cultures, and which tactics are generally ineffective. It is also important for managers to understand how some tactics vary in effectiveness across cultures, and the cultures for which each tactic is most and least relevant. Finally, it is useful to know if there are tactics that are uniquely relevant to a particular culture, or if generic tactics must be used in unique ways to be effective in a particular culture. The findings from our own cross-cultural research and some of the earlier research that we reviewed could be used to help prepare managers for overseas assignments or leadership of teams with multinational memberships. Training programs for improving cultural awareness and understanding could include open-ended and fixed-response scenarios like the ones we use in our research. These scenarios appear useful for assessing training needs, enriching the training process, and developing greater understanding and appreciation of cultural diversity.
CONCLUSIONS Despite the limitations noted here, the results of this study have been useful in identifying similarities and differences in the perceived effectiveness of influence tactics across cultural borders. However, we have only begun to identify the reasons why some tactics are more effective in one culture than another. A priority for future research is to develop a clear theory linking national and cultural variables to the use and effectiveness of managerial influence tactics. In the absence of such theory, we will not be able to generalize beyond the contexts of each specific study.
ACKNOWLEDGMENTS The authors are indebted to Adith Cheosakul of Institute of Business Administration, Thailand; Hiro Higashide of Waseda University, Japan; Jon Howell and Leonel Prieto of New Mexico State University, U.S.; Paul Koopman and Jaap Boonstra of Vrije Universiteit Amsterdam, the Netherlands; Marie-Franc¸oise Lacassagne of Universit´e de Bourgogne, France; Selda Pasa of Bogazici University Istanbul, Turkey; T. K. Peng of Department of Business Administration, I-Shou University, Taiwan; and E. S. Srinivas of Jamshedpur Labor Relations Institute, India, for their assistance with survey translations and data collection. This research was supported in part by funding from the Research Grants Council of the Hong Kong SAR (1999/2000 CUHK4050/99H).
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CULTURAL ADAPTABILITY AND LEADING ACROSS CULTURES Jennifer J. Deal, Jean Leslie, Maxine Dalton and Chris Ernst ABSTRACT Managers with global responsibilities work across distance, across differences in country infrastructure, and across differences in cultural values and expectations. Although the work of global managers is in some respects the same as the work of domestic managers – they must provide leadership, direct action and manage information – in order to be effective, global managers must adapt how they do their work to the global context. Research indicates that success as a global leader depends significantly on the leader’s ability to interact effectively with others who are culturally different. To do this, leaders must be able to adapt their behavior appropriately to the particular circumstances in which they are working. Cultural adaptability is critical to successful global leadership. Research shows that cultural adaptability is related to a number of different experiences, both on and off the job. In this chapter we review the literature on cultural adaptability and leading across cultures; and building on what we know about learning from experience, we suggest developmental experiences which can help leaders develop their cultural adaptability.
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INTRODUCTION Questions of what managers need both personally and developmentally to be able to effectively lead globally is becoming more prominent in discussions in human resource departments. Human resource and training professionals are asking what global leaders need to know, and how they can help them develop that knowledge. Research recently conducted at the Center for Creative Leadership has explored the connection of roles, personality and capabilities to the effectiveness of managers whose work was global in scope. This research revealed that there are a number of important capabilities that contribute to success as a global leader, of which cultural adaptability is arguably the most important. In this chapter, we describe in more detail this facet of effective global leadership. To this end, we will describe how the literature influenced our investigation, our research findings and implications for practitioners.
Cultural Adaptability Cultural adaptability is the motivation and ability to adapt one’s behavior to the prevailing norms, values, beliefs, customs, and expectations that function as a societal level prototype in a given geographical location. At the very least, cultural adaptability represents knowledge of prevailing norms, expectations and practices, so that failure to adapt is a conscious choice rather than merely an error of ignorance. We have been most interested in the cultural adaptability of the business manager, principally when the manager is in the role of leader. In this role the manager needs to be able to work effectively with different others, especially when working globally (Clark & Matze, 1999). Cultural adaptability is an old and diverse construct, grounded in the training literature of institutions such as the United States Peace Corps, international religious missionary communities, various countries’ diplomatic corps and militaries, and the international business community (Grove & Torbiron, 1985; Torbiron, 1982). Peace Corps volunteers, for example, face a situation where they must relocate and adjust to living in another culture, and must assume the roles of teachers and helpers. International diplomats face yet another situation. They must relocate and adjust to living and working in another culture in order to represent the interests of their country with a high level of political sensitivity and potential visibility. The role of a military spouse may be to relocate and adjust to living in an enclave of fellow expatriates. Each of these institutions has struggled to prepare people to work effectively in other cultures (e.g. Hannigan, 1990); and
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because of their diverse roles such institutions have developed different ways to describe cultural adaptability. Studies conducted by McCall, Spreitzer and Mahoney (1994), and Spreitzer, McCall and Mahoney (1997) explored whether cultural adaptability is related to the effectiveness of international executives. Their taxonomy of competencies and learning skills included a skill they named “Adapts to cultural differences.” This skill was hypothesized to predict success as an international executive. Spreitzer et al. (1997) presented the original five-item scale in a subsequent factor analysis as two scales: “Sensitive to cultural differences” and “Is culturally adventurous.” Managers’ ratings of an individual’s potential success as an international executive and expatriate were found to be related to managers’ ratings of an individual’s perceived skill on these two scales. The result suggests that cultural adaptability is related to actual job performance for global managers, as well as to cross-cultural adjustment. How important cultural adaptability is to working globally is in part contingent on the nature of the work itself. In the first volume of this series, Gessner and Arnold (1999) commented on the difficulty of defining the terms “global manager” and “global leader.” They noted that each of the chapters in their edited volume offered a different perspective on what is meant by these terms, and finally suggested that “leadership involves people in business settings whose job or role is to influence the thoughts and actions of others to achieve some finite set of business goals. When we add the concept of global to the definition, we are usually in agreement that this is leadership displayed in large, multicultural contexts; that is, not just from one’s native perspective. However, at this time, we are not limiting it to a specific number of other cultures” (p. xv). Many other authors have also dealt with this issue of definition (e.g. Bartlett & Ghoshal, 1989; McCall & Hollenbeck, 2002). In our work, we first refer to global managers because “manager” describes a position, i.e. a level of responsibility; and “global” describes the scope of the work – managing across distance, countries and cultures. When we refer to global leaders, we are referring to one of the roles that global managers must play. The global manager who does not work as an expatriate does not face the same adjustment issues as those who do work as expatriates, as is extensively described in the cultural adaptability literature. The global manager who is not an expatriate works as a traveler and/or from a distance, and is simultaneously responsible for activities in multiple countries – countries that do not necessarily share a common culture, monetary system, political structure, or legal authority. Also, when such a global manager is called upon to adopt a leadership role, it is with people who most likely have very different expectations about how leaders should behave in their interactions with peers, colleagues, competitors, direct reports, superiors, vendors,
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the government, etc. In the cultural adaptability literature, it is often difficult to sort out which issues are associated with job performance, and which are associated with the adjustment to living in a new country (Ones & Viswesvaran, 1997).
Developing Cultural Adaptability There are three literatures that are relevant to understanding how individuals can become more culturally adaptable. The first is the literature on aspects of crosscultural adaptation, the second is the literature on international experience, and the third is the training literature. Adaptation There are a number of literatures that are related to helping people learn to adjust to working or interacting with people who are different. The psychological theory of “mere exposure” (Zajonc, 1968) might partially explain why some individuals are more culturally adaptable. Proponents of this theory argue that if individuals are repeatedly exposed to a stimulus (in this case, to people who are different) they will have a more positive orientation toward that stimulus than toward a stimulus with which they have had no contact (Zajonc, 1968). In 1989, Bornstein explained this concept further: “It’s advantageous to human beings to prefer the familiar to the novel. The familiar is safe and predictable; the unfamiliar is unsafe and unpredictable” (p. 282). Bornstein (1989) argued that preference for the familiar is an adaptive human trait, but that the preference is not immutable. Thus, individuals exposed to cultural differences early in their lives or careers will have a broader sense of what constitutes the familiar than will individuals who have not been so exposed. They will not experience the cultural “other” as unfamiliar, and they will experience less anxiety about what appears different. It is expected that adults who have not grown up around culturally different others will be more threatened by the prospect of cultural adaptability than will adults who have had broad – and positive – experiences with people who are different from themselves. If people are more comfortable with culturally different others, they are less likely to experience culture shock when working with them. Culture shock is defined as the anxiety that results from an individual’s attempt to process and understand how the world works in a different cultural context, so the standard meanings of behavior may differ (Oberg, 1960). Although this construct was originally coined to describe the adjustment experience of the expatriate or sojourner, we believe it is applicable to the work of the global manager. People constantly monitor and interpret their own and others’ behavior in an effort to understand how
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the world functions, and what they should do as a result. Different cultures attach different meanings to behaviors, so a behavior that has one meaning in one culture may have a different meaning in another culture. For example, saying “Yes” to a suggestion in one culture may be more of a specific agreement to go ahead with the suggested action than in another culture. Putting an ATM machine in the workplace may be a good idea in one culture, but could violate basic cultural norms in another culture, such as who gets access to a paycheck and when. Providing wine during lunch in a company cafeteria may be forbidden in one country, but a cultural requirement in another country. Because of these differences, people often feel as though all of the rules through which they understand the world have changed, and go into culture shock. As Adler put it, “Culture shock is a form of anxiety which results from the misunderstanding of commonly perceived and understood signs of cultural interaction” (1975, p. 13). There may in fact be more culture shock for a global manager sitting at his desk in Tokyo trying to understand the uproar at his manufacturing sites in France when wine is not available in the cafeteria, than if he were actually an expatriate living in country with the opportunity to observe the cultural context. While some might look at culture shock as a barrier, Adler treated culture shock as a developmental opportunity, an experience that allows a person first to understand the perspective and position of his or her own value set, and then to investigate, reintegrate and reaffirm its relationship to others. Anderson (1994) took the idea of cultural adaptability as a developmental result of culture shock a step further, and divided the cultural adaptation literature into four major models: the recuperation model, the learning model, the journey model, the homeostatic model. She suggests that it is a mistake to consider cultural adaptation as different from other transitional processes, arguing that cultural adaptation is simply an accommodation to change similar to many other methods of adjustment. Our view of cultural adaptability is close to that of Anderson’s homeostatic model (1994). The homeostatic model says that cultural adaptation requires a change in the perceptual frame of an individual in order to be able to successfully adapt to their environment (Anderson, 1994; Grove & Torbiron, 1985; Torbiron, 1982). This model indicates that cultural adaptability is more than a superficial accommodation to the situation at hand; the individual’s perspective and behavior actually have to change for them to be able to adapt to the new context. International Experience One way people can change their understanding of the world is through their own international experiences. Even in the early 1900s, Harlow Gale discussed the necessity of travel and education in creating a cosmopolitan citizen (1919). Seventy-four years later Ratiu (1983) followed a similar line of reasoning in some
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research with INSEAD students. In this work, he investigated how international executives learned, and found that the successful “internationals” learned differently from those who were not described as internationals. The critical differences in learning styles were that internationals used cultural stereotypes only provisionally, dealt with the stress of interacting with different others by acknowledging it, and tended to understand other cultures by questioning rather than by assigning motivations. The managers not described as internationals typically believed that stereotypes were enduring, did not acknowledge stress, and tended to ascribe motivations to behaviors without questioning. Ratiu did not investigate how those in the “internationals” group acquired their skills. He stated that many of them had childhood experiences that had facilitated the development of these skills, but he did not explicitly identify which experiences were critical to their development. Kets de Vries and Mead (1992) followed a similar line of thinking about the experiences they thought were critical in the development of the global manager. They discussed in detail the types of experiences a good global manager should have, and described specific types of experiences that help an “international” to develop skills. In addition to standard technical competence and business experience, these authors believed that global managers need to be able to interact effectively with people who are culturally different from themselves. One way this skill can be learned, they suggested, is through a number of development factors, including cultural diversity in the family, early international experience, bilingualism, self-confidence, hardiness, envisioning, study in another culture, and study in an international environment. Kets de Vries and Mead (1992) went on to say that early socialization into crosscultural environments could be an important factor in the adults’ ability to work cross-culturally. They wrote: “Given the impact of childhood socialization on adult development, it is to be expected that early exposure is a determining factor in how successful the individual will be in dealing with cultural adaptability later in life” (1992, p. 193). Further, they said that “the strongest influences on both leadership qualities and the ability to adapt culturally stem from childhood background and psychological development . . . it can be said that in the development of a global leader ideally it helps to have a childhood background characterized by cultural diversity, one aspect being early international experience” (Kets de Vries & Mead, 1992, p. 200). Kets de Vries and Florent-Treacy (1999) examined the lives of Richard Branson, Percy Barnevik and David Simon – three very successful global leaders. In addition to examining the technical competence and business savvy of these leaders, the authors discussed their life experiences and ability to work with others. The authors found that all three had faced situations during their childhoods that increased their
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ability to interact effectively with people possessing very different perspectives, especially culturally different perspectives. These three leaders had to work with differences in their early lives and had developed a hardiness that helped them undertake the effort it takes to work in that environment. Training Just as international experiences of different kinds and at different ages can affect cultural adaptability, so can specific work-centered training as an adult. Organizations have attempted to teach managers how to become more culturally adaptable. The training literature indicates that becoming more aware of one’s own biases and prejudices may motivate individuals to adapt their behavior to more accurately fit their environment (Chrobot-Mason, 2002; Devine & Monteith, 1993; Giacalone & Beard, 1994; Mendenhall & Wiley, 1994; Tsui & Ashford, 1994). Evaluations of cross-cultural training used to prepare expatriates for international work has shown training to be fairly successful (Bhawuk & Brislin, 2000). One method that has received a great deal of attention and support from research is the work using cultural assimilators, which are similar to the use of critical incidents in training (Bhawuk & Brislin, 2000; Flanagan, 1954). This method uses a more controlled form of “real” experiences for trainees by providing them with multiple real scenarios and behavioral choices for how to respond, and then feedback about which of the options they chose. Other common training methods include role-plays, simulations, experiential activities (both outside and inside the classroom), lectures, reading on cultural differences both generally and with reference to a specific country, and workshops focused on increasing individuals’ understanding and awareness of their own culture and cultural assumptions. Cross-cultural training is believed to be effective because it affects impression management and how people manage the anxiety they feel when in cross-cultural interactions (Giacalone & Beard, 1994; Mendenhall & Wiley, 1994). Training is found to be more effective when trainees have developed confidence in their ability to act effectively in cross-cultural interactions by practicing, even if that practice has been in role-plays or simulations (Black & Mendenhall, 1990). Research focused on training people to work internationally has demonstrated the need to view this learning as a long-term developmental process (Chrobot-Mason, 2002). Given the variety, depth of flexibility, and understanding needed to work across distance, country and culture, we decided to focus on the concept of cultural adaptability as key to the effectiveness of the global leader: (1) who is most likely to have this skill or able to acquire it, and (2) how do people acquire cultural adaptability? We were interested in actual job effectiveness as seen through the eyes of the leader’s supervisor, and we wanted to know how the global manager got that way. For our purposes, we defined cultural adaptability as the ability to adapt
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one’s behavior to the prevailing norms, values, beliefs, customs, and expectations in a given culture. Our Research This chapter draws from a much larger project (Dalton, Ernst, Deal & Leslie, 2002; Leslie, Dalton, Ernst & Deal, 2002). The larger project focused on two questions: “What do global leaders do?” and “What does it take for a leader to be effective when the work is global in scope?” In our study, we focused on what skills and capabilities help a leader be effective when working globally. We had leaders fill out a number of surveys in order to assess their skills in a variety of roles including the leadership role. Managers and their bosses filled out survey instruments that assessed effectiveness in the current position. Finally, we asked about past and present international experiences and other factors likely to be relevant to the development of cultural adaptability. In the following section we describe the method for the entire study, but we will only address the variables of interest in the data analysis: skill in the leadership role, cultural adaptability, experience, and performance.
METHODS Participants Two hundred eleven managers from four organizations participated in this study. Ninety-eight managers were from a Swiss-based pharmaceutical. Twenty-five managers worked for a U.S.-based high-tech manufacturing firm. Forty-eight managers worked for a Swiss-based hospitality and service organization. Forty managers worked for a Swedish-based truck manufacturing and construction organization. Managers within each of the four organizations were at approximately the same organizational level, primarily in mid-level managerial positions. The sample was primarily middle-aged (Median = 44.5 years), Caucasian (89%), and male (83%). Half the sample had at least 18 years of education. The majority of the managers had been educated in only one country. Forty-one countries of birth were represented in the sample. Forty-three percent were Northern European (German, Sweden and Switzerland), and 18% were from the United States. This distribution reflects a disproportionate representation from the corporate headquarters location of the four participating organizations. Participants lived in 30 countries at the time of the study with 66.9% in Switzerland, Germany, Sweden, or the U.S., again reflecting the headquarters locations. The high global complexity sample (see below) was more likely to have been in their jobs for less than a year (28% vs. 42%), and was more likely to have been expatriates in the past.
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Measures Managers participating in the study were asked to complete the 240-item NEO PI-R personality measure, a biographical form, and measures of role skills and learning capabilities. The surveys were all in English. Corporate sponsors assured us that reading and responding in English would not be a problem for this sample and their bosses. Managers were assured in writing that their individual results would be available only to the research team. The manager’s bosses were asked to fill out a 22-item confidential measure evaluating the manager’s effectiveness. Participating organizations were assured that the results from their companies would be confidential. A proprietary report describing aggregated in-company results was prepared for each of the sponsor companies. Demographics Each manager filled out a background form indicating gender, age, native language, country of birth, and race or ethnic origin. Personality The NEO PI-R presents personality traits grouped into five major factors: emotional stability, extroversion, agreeableness, openness to experience, and conscientiousness (Costa & McCrae, 1992). Each of the five factors in the NEO PI-R is made up of six subscales (see Table 1 ). This instrument was chosen for this study because of its psychometric integrity, and because of extensive research demonstrating that this instrument is valid (if not all-inclusive) across cultures (McCrae & Costa, 1997). On this personality measure, managers rated themselves on a five-point scale ranging from strongly disagree to strongly agree. Experiences Each manager filled out a background form indicating tenure with the company, years in current role, expatriate experience, languages spoken in the course of doing work, languages spoken before age 13, number of countries lived in, country currently living in, years of formal education, number of countries educated in, and major field of study. Roles A 56-item seven-scale measure was constructed (based on Mintzberg’s work) to represent role behavior. Many of these items were derived from an existing instrument, Skillscope (Kaplan, 1997). The rest were written based on the literature. The scales were conceptualized within Mintzberg’s groupings: Informational roles; Interpersonal roles; and Action roles. Sample items for the leader scale are
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Table 1. The Five Factor Model as Measured by the NEO PI-R. Factor
Definition
Description
(N) Neuroticism (Emotional Stability)
Anxiety, angry hostility, depression, self-consciousness, impulsiveness, vulnerability
(E) Extroversion
Warmth, gregariousness, assertiveness, high activity, excitement-seeking, positive emotions Fantasy, aesthetics, feelings, actions, ideas, values
This personality type has a general tendency to experience negative affects such as fear, sadness, embarrassment, anger, guilt, and disgust. People with high N scores tend to be less able to control their impulses and cope poorly with stress. Extroverts are sociable. They like people, prefer large gatherings, and are assertive, active, and talkative. They like excitement and stimulation and tend to be energetic and optimistic. People with high O scores have an active imagination, aesthetic sensitivity, attentiveness to inner feelings, preference for variety, intellectual curiosity and independence of judgment. They are willing to entertain novel ideas and unconventional values and they experience emotions more keenly than closed individuals. The agreeable person is altruistic, sympathetic to others and eager to help them, and trusting and cooperative rather than competitive.
(O) Openness
(A) Agreeableness
(C) Conscientiousness
Trust, straightforwardness, altruism, compliance, modesty, tender-mindedness Competence, order, dutifulness, achievement striving, self-discipline, deliberation
The person with a high C score is purposeful, strong-willed and determined, achievement-oriented, scrupulous, punctual and reliable.
Costa, P. T., & McCrae, R. R. (1992). Revised NEO Personality Inventory and NEO Five-Factor Inventory: Professional Manual, 14–18. Odessa, FL: PAR.
provided in Table 2 . Managers rated themselves on a 5-point scale ranging from 1 (one of my greatest strengths) to 5 (is something I am not able to do). Learning Scales Five items were written to represent cultural adaptability (see Table 2), and four items were written to represent perspective-taking. These items were derived partly from existing instruments Prospector© (McCall, Spreitzer & Mahoney, 1996), Skillscope© (Kaplan, 1997) and the literature. Managers rated themselves on the previously described 5-point scale.
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Table 2. Items for Cultural Adaptability, Leadership, Knowledge and Initiative. Cultural Adaptability Scale (alpha 0.85) 1. Effectively select and develop people in multiple cultural settings. 2. Can motivate multicultural teams effectively. 3. Can evaluate the work of others in a culturally neutral way. 4. Can inspire information sharing among individuals who do not know/see each other and who may represent different cultures. 5. Can adapt management style to meet cultural expectations. Leader Scale (alpha 0.90) 1. Am adept at establishing and conveying a sense of purpose within the organization. 2. Am a team builder; bring people together successfully around tasks. 3. Structure subordinates’ work appropriately. 4. Recognize and reward people for their work. 5. Am effective at managing conflict. 6. Confront others skillfully. 7. Make good judgments about people. 8. Attract talented people. 9. Consider personalities when dealing with people. 10. Am a good coach, counselor, mentor; patient with people as they learn. 11. Bring out the best in people. 12. Give subordinates appropriately challenging assignments and the opportunity to grow. 13. Make good use of people; do not exploit. 14. Am inspirational; help people to see the importance of what they are doing. 15. Am able to inspire, motivate people; spark others to take action. 16. Delegate effectively. Knowledge and Initiative (alpha 0.78) 1. Takes calculated entrepreneurial risks. 2. Demonstrates independence and initiative. 3. Has broad business knowledge of political, economic and technological issues. 4. Demonstrates confidence in the face of ambiguity. 5. Is professionally competent. 6. Has superior knowledge of the business.
Performance Measure Twenty-two items were drawn from the literature, then supplemented and revised in consultation with the Director of Executive Development from one of the European sponsor companies to represent managerial performance. Conceptually, the 22 items were written to address four dimensions of managerial performance: (a) management and leadership; (b) interpersonal relationships; (c) knowledge and initiative (see Table 2); and (d) success orientation. The supervisor of each manager was asked to respond to the 22-item performance statements on a five-point scale ranging from 5 (Strongly agree) to 1 (Strongly disagree). A “not applicable”
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response category was provided. These responses were returned directly to the research team. Assignment to High and Low Global Complexity Group Conceptually, global complexity is the result of an interaction of distance, country infrastructure and cultural expectations. In the present study, two items from a biographical measure were used to classify managers into low and high global complexity groups. The first item asks, “In how many countries are you a manager?” and offers four responses: (a) “one country – I am not an expatriate,” (b) “one country – I am an expatriate,” (c) “more than one country on the same continent,” and (d) “more than one country on different continents.” A score was assigned to these responses in the following way (a) = 1 point; (b) = 2 points; (c) = 3 points; (d) = 4 points. The second item asks, “In how many time zones do you work?” and offers the following responses: (a) 1, (b) 2–3, (c) 4–5, (d) 6 or more. Again, points were assigned to (a) through (d) in the same fashion. The time zone item was added to the country numbers item to try to balance the fact that in some contexts one might manage multiple countries in a few time zones and in other contexts one might manage only one country with multiple time zones. Neither item alone seemed sufficient. To form the low global complexity group and high global complexity group, the time zones and country items were summed, with an after-sum range of 2–8. A median split was performed (Median = 3), resulting in two groups: a low global complexity group with values from 2 to 3 (n = 110), and a high global complexity group with values from 4 to 8 (n = 101). Standardization of Data Because managers were from different organizational cultures, functions, industry types, and corporate headquarter locations, we standardized all of the data within organization before combining the four data sets in order to control as much extraneous variance as possible. It was not possible to control for cultural differences in the use of rating scales because of the small numbers of people from some regions.
Data Analysis Mean scores on all scales (including the performance criteria) were compared to ensure that one group was not systematically rating itself higher than the other,
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Table 3. Correlation Matrix. Variable
1
2
3
4
5
6
7
8
9
1. Emotional stability 0.80 −0.43 −0.27 −0.22 0.00 −0.07 −0.23 −0.00 0.01 2. Conscientiousness 0.81 0.25 0.28 0.05 0.08 0.34 0.00 0.12 3. Leader 0.90 0.71 0.27 0.11 0.27 −0.03 0.18 4. Cultural adaptability 0.85 0.40 0.45 0.26 0.08 0.15 5. Number languages xx 0.29 0.14 −0.20 0.10 6. Number countries xx 0.00 −0.09 −0.08 7. Knowledge/achievement 0.78 0.33 0.63 8. Interpersonal relationships 0.80 0.70 9. Managing-leading 0.87 Scale alphas (on the diagonal) and intercorrelations among the relevant variables. Correlations significant at the level of p < 0.05 are shown in bold.
and that bosses were not systematically rating one group differently from another. There were no statistically significant differences in mean scores on any of the scales or performance criteria between the low and high global complexity groups. The data were then correlated. The results (see Table 3 ) indicate the magnitude and direction of the relationships between the variables in the high global complexity condition. In the sections that follow we will only be discussing results for the high global complexity group on the variables of leadership, cultural adaptability, performance, personality, and international experience.
RESULTS AND DISCUSSION The results indicated that cultural adaptability was related to performance; global managers with higher scores on cultural adaptability were more likely to be identified by their bosses as high performers. Specifically, global managers with higher cultural adaptability scores received higher scores from their supervisors on knowledge and initiative (r = 0.26, p < 0.05). We then investigated the relationship between cultural adaptability and the skill of leadership. Cultural adaptability was related to behaviors associated with the leadership role, (r = 0.71, p < 0.05). This indicates that skill as a leader in a global context is correlated with the ability to adapt one’s leadership style to the situation at hand. We then turned to the relationships between personality and cultural adaptability, and between international experiences and personality. Cultural adaptability is related to the personality traits of Emotional Stability (r = −0.22, p < 0.05) and Conscientiousness (r = 0.28, p < 0.05). This suggests that the skills associated
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with cultural adaptability are consistent with emotional resilience and the inclination to achieve through hard work and dependability. Finally, we investigated the relationship between a sampling of international experiences and cultural adaptability. We found that cultural adaptability was significantly related to the number of languages a person speaks (r = 0.40, p < 0.05), and the number of countries one has lived in (r = 0.45, p =< 0.05). This suggests that international experiences outside of work contribute significantly to the development of cultural adaptability.
Developing Leaders for Global Work: What do Organizations Need to Know and Do to Select and Develop People Who will Lead Effectively in the Global Economy? As Mintzberg wrote (1973, 1994), all managers must play the same basic roles but they must be able to adapt these roles to the context. In a given context, certain roles are more important than others, and the enactment of a given role must be adapted to the situation at hand. It is our argument that while skill in the leadership role is required whether the work is global or domestic, the effective global manager will be able to adapt his or her behavior to the cultural context. However, while leadership was related to performance for managers in global and domestic roles, cultural adaptability was related to performance only for managers in global roles. How then does a manager develop the capability of cultural adaptability? We think our data set offers some hints and direction. Personality If we think about development as part motivation, part ability and part opportunity, personality represents the motivation part of the equation. We suggest that those aspiring to complex global roles who are able to cope with stress and who aspire to achieve will be more motivated to engage in the difficult work of becoming crossculturally adept than those who are stress-prone and less interested in achievement. McCall and Hollenbeck (2002) describe a global manager as one whose work is exceptionally personally complex. “There is indeed no one kind of global executive; there are many. These global executives work across borders – borders of business, of product, of function, and of country . . . crossing country and cultural borders is the determining piece. Crossing business borders . . . is fundamentally different from crossing borders of country and culture . . .. The first is primarily a cognitive or intellectual task. The second is an assault on the identity of the person” (p. 22). Perhaps the traits of emotional stability and conscientiousness provide a base from which individuals can cope with having their cognitive frames torn asunder. Does
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this mean that people without these traits will not become culturally adaptable? Certainly not! It means that acquiring this capability will be easier for some than others, and those with these traits will probably find it to be easier to develop this capability than will people without these traits. International Experience We note in our data that some of the international experiences related to cultural adaptability are childhood experiences, and some are adult experiences. An individual who had childhood exposure to other languages and cultures, experienced living in other countries as an expatriate, or who was multilingual at work is likely to have higher scores on cultural adaptability. This result is consistent with the literature (Kets de Vries & Mead, 1992; Ratiu, 1983). Part of cultural adaptability is making choices that expand on our childhood experiences by adding adult experiences. Since we know that speaking more languages, living more places, and working with different people can assist in the development of cultural adaptability, we can encourage individuals who want to be global leaders to learn languages, to travel, to work on teams with people from different cultures, and to seek out expatriate experience. A critical component of this adult experience is that it is done mindfully. Just having the experience does not mean that the individual has learned from it; this is not the sort of learning that is checked off as having been learned because it was heard in a classroom or read in a book. Organizations can intentionally go about developing a global workforce through increasing access to adult international experiences such as speaking a number of languages in the workplace, serving in the role of the expatriate, traveling, and living in a variety of countries. The intentional use of graduated international experiences for those motivated to learn is probably the best strategy available to the organization at this stage of our understanding – if it is done carefully and with appropriate support. Expatriate assignments which are not undertaken carefully can actually reduce an individual’s cultural adaptability. Aspiring global managers should be sent on international business trips, and be regularly debriefed about what they have learned as well as what they have accomplished. They should be provided with the opportunity to work alongside skilled international executives. They should be given assignments on cross-cultural teams, and they should be sent on expatriate assignments. These experiences allow aspiring global managers the opportunity to accomplish the work and develop new skills at the same time. This is not a new thought. This work builds on a long tradition of adult learning, especially learning in the workplace (Hall, Zhu & Yan, 2001; Kolb, 1984; Marsick & Watkins, 1990; VanVelsor, 1998). In our global research we have coined the term “same but different.” Global managers must play the same roles but they must play them differently. Cultural
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adaptability is one of the capabilities that allows them to be the same but different. Perhaps “same but different” also applies to how people develop these global capabilities. The same principles of adult learning apply, but what aspiring managers need to learn and how and where they can best learn it are different. Perhaps the antecedent conditions (personality and cosmopolitanism) will also turn out to be somewhat different.
CONTRIBUTIONS AND LIMITATIONS OF THIS WORK The literature about global managers and global leaders is often abstract and difficult for a manager or HR professional to operationalize. This work contributes to the field in that we have put the constructs of cultural adaptability, global manager and global leader into concrete business language that can be translated back to the workplace. We have also been able to test some of our hypotheses with practicing managers who are doing global work in real organizations; and we have been able to use the real-life criterion of boss performance ratings to evaluate differences. Finally, we have developed ideas and hints as to how cultural adaptability is and can be developed. There are two significant limitations to this work. First, although the sample represents individuals working in 41 countries, the majority of them work in Northern Europe and the U.S. This work needs to be extended to include much larger samples from other parts of the world. Second, our correlations, although significant at a high level of confidence, are quite modest. Larger samples will allow for application of more sophisticated modeling techniques.
REFERENCES Adler, P. (1975). The transitional experience: An alternative view of culture shock. Journal of Humanistic Psychology, 15(4), 13–23. Anderson, L. E. (1994). A new look at an old construct: Cross-cultural adaptation. International Journal of Intercultural Relations, 18(3), 293–328. Bartlett, C. A., & Ghoshal, S. (1989). Managing across borders: The transnational solution. Boston: Harvard Business School Press. Bhawuk, D. P. S., & Brislin, R. W. (2000). Cross-cultural training: A review. Applied Psychology: An International Review, 49, 162–191. Black, J. S., & Mendenhall, M. (1990). Cross-cultural training effectiveness: A review and a theoretical framework for future research. Academy of Management Review, 15, 113–136. Bornstein, R. F. (1989). Exposure and affect: Overview and Meta-Analysis of research, 1968–1987. Psychological Bulletin, 106(2), 265–289. Chrobot-Mason, D. (2002). Examining Group Identity Theory to Understand Leadership across Differences. Unpublished manuscript.
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Clark, B. D., & Matze, M. G. (1999). A core of global leadership: Relational Competence. In: W. H. Mobley, M. J. Gessner & V. Arnold (Eds), Advances in Global Leadership (Vol. 1). Stamford, CT: JAI Press Inc. Costa, P. T., Jr., & McCrae, R. R. (1992). Revised NEO Personality Inventory (NEO PI-R) and NEO Five-Factor Inventory (NEO-FFI) Professional Manual. Odessa, FL: Psychological Assessment Resources. Dalton, M., Ernst, C., Deal, J., & Leslie, J. (2002). Success for the new global manager: What you need to know to work across distances, countries, and cultures. San Francisco, CA: Jossey-Bass. Devine, P. G., & Monteith, M. J. (1993). The role of discrepancy-associated affect in prejudice reduction. In: D. M. Mackie & D. L. Hamilton (Eds), Affect, Cognition and Stereotyping: Interactive Processes in Group Perception. San Diego, CA: Academic Press. Flanagan, J. (1954). The critical incident technique. Psychological Bulletin, 51, 327–358. Gale, H. (1919). The psychology of “native sons”. The American Journal of Psychology, 30(1), 27–39. Giacalone, R. A., & Beard, J. W. (1994). Impression management, diversity and international management. American Behavioral Scientist, 37(5), 621–636. Grove, C. L., & Torbiron, I. (1985). A new conceptualization of intercultural adjustment and the goals of training. International Journal of Intercultural Relations, 9, 205–233. Hall, D. T., Zhu, G., & Yan, A. (2001). Developing Global Leaders: To hold on to them, let them go! In: W. H. Mobley & M. W. McCall (Eds), Advances in Global Leadership (Vol. 2). Amsterdam: JAI Inc. Hannigan, T. P. (1990). Traits, attitudes and skills that are related to intercultural effectiveness and their implications for cross-cultural training: A review of the literature. International Journal of Intercultural Relations, 14, 89–111. Kaplan, R. E. (1997). SKILLSCOPE. Greensboro, NC: Center for Creative Leadership. Kets de Vries, M., & Florent-Treacy, E. (1999). The New Global Leaders: Richard Branson, Percy Barnevik, David Simon, and the Remaking of International Business. San Francisco, CA: JosseyBass. Kets de Vries, M., & Mead, C. (1992). The development of the global leader within the multinational corporation. In: V. Pucik, N. M. Tichy & C. K. Barnett (Eds), Globalizing Management: Creating and Leading the Competitive Organization. New York, NY: John Wiley & Sons, Inc. Kolb, D. (1984). Experiential learning: Experience as the source of learning and development. New Jersey: Prentice Hall, Inc. Leslie, J., Dalton, M., Ernst, C., & Deal, J. (2002). Managerial effectiveness in a global context: A conceptual model of predictors. Greensboro, NC: Center for Creative Leadership. Marsick, V., & Watkins, K. (1990). Informal and incidental learning in the workplace. London, UK: Routledge. McCall, M. W., & Hollenbeck, G. P. (2002). The lessons of international experience: Developing global executives. Boston, MA: Harvard Business School Press. McCall, M. W., Spreitzer, G. M., & Mahoney, J. (1994). Identifying leadership potential in future international executives. Lexington, MA: ICEDR. McCall, M. W., Spreitzer, G. M., & Mahoney, J. (1996). Prospector: Discovering the ability to learn and to lead. Greensboro, NC: Center for Creative Leadership. Mendenhall, M. E., & Wiley, C. (1994). Strangers in a strange land. The relationship between expatriate adjustment and impression management. American Behavioral Scientist, 37(5), 605– 620. Mintzberg, H. (1973). The nature of managerial work. New York, NY: Harper & Row. Mintzberg, H. (1994). Rounding out the manager’s job. Sloan Management Review (Fall), 11–26.
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Oberg, K. (1960). Culture shock: Adjustment to new cultural environments. Practical Anthropology, 7, 177–182. Ones, D. S., & Viswesvaran, C. (1997). Personality determinants in the prediction of aspects of expatriate job success. New Approaches to Employee Management, 4, 63–92. Ratiu, I. (1983). Thinking internationally: A comparison of how international executives learn. International Studies of Management and Organization, 13(1–2), 139–150. Spreitzer, G. M., McCall, M. W., Jr., & Mahoney, J. D. (1997). Early identification of international executive potential. Journal of Applied Psychology, 82(1), 6–29. Torbiron, I. (1982). Living abroad: Personal adjustment and personnel policy in the overseas setting. New York, NY: Wiley. Tsui, A. S., & Ashford, S. J. (1994). Adaptive self-regulation: A process view of managerial effectiveness. Journal of Management, 20, 93–121. VanVelsor, E. (1998). Assessing the impact of developmental experiences. In: C. McCauley, R. Moxley & E. VanVelsor (Eds), The Handbook of Leadership Development. San Francisco, CA: Jossey Bass. Zajonc, R. B. (1968). Attitudinal effects of mere exposure. Journal of Personality and Social Psychology Monographs, 9(2), 1–27.
LEADERS’ SOURCES OF GUIDANCE AND THE CHALLENGE OF WORKING ACROSS CULTURES Peter B. Smith ABSTRACT Leaders in different cultural contexts rely on various sources of guidance. Mapping these sources can lead to a clearer understanding of the types of challenges faced by global leaders than can be gained by focusing on their values. In this chapter, a series of clusters of nations are identified, and within each, leaders are found to favor a distinctive profile of guidance sources. When multinational enterprises seek to work across the boundaries defining these clusters, a series of individual and culture-level challenges arise. The best ways of handling these challenges are discussed.
INTRODUCTION In recent years there has been a growing tendency to assert that differences in national culture need not impede the effectiveness of multinational enterprises. For instance, Hofstede’s (1980) classic delineation of cultural differences is seen as lacking in practical value, partly because his data was collected long ago, but more importantly because he characterized whole cultures and not individuals. Contemporary global managers, it is argued, have the experience and learning skills that enable them to develop methods of handling the cultural differences that Advances in Global Leadership Advances in Global Leadership, Volume 3, 167–181 Copyright © 2003 by Elsevier Science Ltd. All rights of reproduction in any form reserved ISSN: 1535-1203/PII: S1535120302030095
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may exist within the teams and enterprises in which they are engaged. For instance, Holden (2002) proposes that the manner in which multinational enterprises build and sustain their operations can be much better understood in terms of knowledge management concepts than in terms of abstract dimensions of culture. He presents detailed case studies of the way in which a Japanese company, a Swiss company and two Danish companies each sought to build a shared sense of company vision. This chapter addresses both facets of this argument. First, an analysis of recent studies is conducted to determine if they have made available maps of contemporary cultural difference that are more relevant to management in the 21st century than Hofstede’s map. Second, there will be a discussion of how managers and employees can work more effectively within the context of continuing cultural differences. Running through both of these sections will be a common theme – that effective global leadership cannot be thought of simply in terms of globally effective individual traits or organizational policies. Leadership always occurs within a cultural context and that context shapes and reinterprets the meanings of leaders’ actions.
MAPS OF CULTURAL DIFFERENCE Although Hofstede (2001) has recently published a new and much revised edition of his classic work, the analyses within it continue to be based upon his original data, much of which was collected more than 30 years ago. Therefore we must look elsewhere for information on the ways in which members of national cultures do or do not differ from one another in the modern world. Several studies are available that follow relatively closely the path opened up by Hofstede. Each of these has sought to identify the value profiles of samples of respondents within a relatively large number of nations. The presumption behind these studies is that values are the preferred concept in the identification of cultural differences. Schwartz (1992) for instance, argues that while the same behavior may be given different meanings within varying cultural contexts, values can be specified in a more abstract manner. He demonstrates ways in which it can be determined whether a given value does have the same meaning in different cultural contexts. Using those values that are found to have relatively consistent meaning, Schwartz (1994) then reports country scores for a range of different clusters of values that he refers to as value types. These data are drawn from samples of students and of teachers from more than 60 nations. Some consistency is found with the dimensions identified earlier by Hofstede, even though the populations sampled are different.
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Data derived from surveys of business employees’ values initiated by Trompenaars (1993) was later analyzed by Smith, Dugan and Trompenaars (1996). Two principal dimensions of variability were identified, as indicated in Fig. 1. Their sample of nations differed from that covered by Hofstede, in that it was now possible also to include respondents from the former Soviet bloc of nations. As Fig. 1 shows, these nations were found to endorse values that differed markedly from those found in other parts of the world. This increases the likelihood that a
Fig. 1. Country Plot from Smith, Dugan and Trompenaars. Note: ARG = Argentina; AUS = Australia; AUT = Austria; BEL = Belgium; BRA = Brazil; BUL = Bulgaria; BUF = Burkina Faso; CHI = China; CZE = Ex-Czechoslovakia; DEN = Denmark; DDR = Ex-East Germany; ETH = Ethiopia; FIN = Finland; FRA = France; GER = Ex-West Germany; GRE = Greece; HK = Hong Kong; HUN = Hungary; IDO = Indonesia; IND = India; IRL = Ireland; ITA = Italy; JAP = Japan; MEX = Mexico; NL = Netherlands; NIG = Nigeria; NOR = Norway; PAK = Pakistan; PHI = Philippines; POL = Poland; POR = Portugal; ROM = Romania; KOR = South Korea; SPA = Spain; SIN = Singapore; SWE = Sweden; THA = Thailand; TUR = Turkey; UAE = United Arab Emirates; UK = United Kingdom; USA = United State; RUS = Ex-U.S.S.R; YUG = Ex-Yugoslavia.
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better estimate has been obtained of the range of value profiles to be found among the world’s more industrialized nations. Among the other nations in the Trompenaars sample, the dimensions that were identified again proved to be quite strongly correlated with those identified by Hofstede, particularly IndividualismCollectivism and Power Distance. A third major survey of cultural variations in values is provided by sections of the GLOBE project (House, Hanges, Javidan et al., in press; see also Hanges, Dickson & Lim, this volume). The GLOBE culture-level dimensions also show some convergence with the Hofstede dimensions. Thus, there is evidence that the values that prevail among business employees in different nations do continue to vary in ways that broadly reflect at least some of Hofstede’s original dimensions. However, the question that must be considered is whether values do in fact offer us the best basis for understanding the dilemmas faced by global managers.
VALUES AND PRACTICES A lesser known aspect of Hofstede’s work is his analysis of organization cultures (Hofstede, Neuyen, Ohayv & Sanders, 1990). In this study, it was argued that while nations varied in terms of values, the organizations within a nation typically varied more in terms of their practices than in terms of the values that were endorsed by the organization’s members. In other words, if a nation is characterized by a degree of value consensus, different organizations may be distinguishable by distinctive interpretations of the ways in which those values should be implemented in practice. This study was based on a series of monocultural organizations in the Netherlands and Denmark. This line of thought brings us much closer to Holden’s knowledge management perspective. If a multinational enterprise employs managers from a diverse range of cultural backgrounds, it is likely that their values will vary more than those found within a monocultural organization. Nonetheless, to be effective the organization must find operational methods that build rather than undermine its effectiveness. This may be accomplished to some extent by a process of diffusion of explicit knowledge concerning essential elements of the organization’s task. These types of knowledge involve day-to-day aspects of technology, logistics, finance and so forth. Problems become more common when we move to the area of tacit types of knowledge, such as assumptions about the meanings and significance of actions in terms of relationships between people. Tacit knowledge is probably more directly linked to values than is explicit knowledge, but any form of knowledge is more contextually dependent than are abstractly stated values. My tacit knowledge arises from my individual experiences at work and elsewhere. Unless I am extremely unreflective,
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I will not assume that this knowledge is applicable in all other contexts. Values, on the other hand, are preference statements about what is desirable in general. Holden’s case studies focus on the ways that the companies that he observed sought to build a shared purpose and vision through the use of various mechanisms for transfer focused on certain types of tacit knowledge. These included the creation of a team of “company facilitators” by Novo Nordisk, the creation of “shared mental space” by Lego, the creation of an “infra-academy” by the Swiss firm Sulzer, and the creation of substantial knowledge redundancy coupled with centralized control by Matsushita. There is a notable contrast between the approaches adopted by the three European companies and by the Japanese firm Matsushita. However, in all cases the company’s aim was clearly one of creating a company culture in which there were shared understandings that extended well into the field of tacit knowledge, rather than just resting on accumulated explicit knowledge.
SOURCES OF GUIDANCE Seeking guidance from others is one way of obtaining explicit knowledge. More often its major purpose is to do with tacit knowledge: identifying different perspectives on an issue and improving one’s capacity to anticipate others’ reactions. This chapter focuses next on the sources of guidance that leaders rely upon in different parts of the world. A large part of leadership deals with the management of ambiguity and conflict. Identifying the sources of guidance upon which leaders choose to rely when faced with these types of situation helps one to understand the challenges faced by multicultural teams and organizations. Knowing how to guide one’s actions in a particular context is a key aspect of tacit knowledge. Smith and Peterson (1988) and Peterson and Smith (2000) proposed an “event management” model of leadership. The essence of this approach is that all events that comprise a manager’s workday are initially ambiguous. In order to reduce that ambiguity, and thereby determine how to handle them, the manager can draw on a variety of guidance sources. The particular sources upon which a leader draws most strongly and frequently will define his or her leadership style. However, that style is defined neither in terms of specific behaviors nor in terms of abstract values. Sources of guidance occupy a location that is halfway between abstract values and specific behaviors or practices. They come closer to representing tacit knowledge, since in a particular cultural location it will most likely be selfevident to a manager that reliance on a particular profile of sources will demonstrate the appropriate way to manage events. In the project developed by Smith and Peterson, a survey was constructed which asked middle managers to rate the extent to which they relied on each
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of eight sources of guidance when handling eight different frequently occurring work events. Over the past decade, samples of middle managers in 53 nations have been surveyed. It was found that there was relatively high consistency across events in the sources that respondents reported they relied upon to the greatest extent. The project could therefore provide mean scores indicating for each of the 53 nations the degree of reported reliance on each of the eight sources of guidance. The most frequently reported source of guidance was “my own experience and training,” followed by “my superior” and then “formal rules and procedures.” The remaining sources were: “unwritten rules about how we usually do things around here,” “my subordinates,” “colleagues at the same level,” “specialists outside my department,” and “beliefs that are widespread in my nation as to what is right.” In comparing responses at the country level, it was found that reliance on one’s own experience and on one’s subordinates was positively correlated, whereas reliance on each of these sources was negatively correlated with reliance on one’s superior and on formal rules and procedures. Reliance on these four sources was therefore summarized in terms of an index of verticality, with nations showing stronger reliance on the more hierarchical sources of guidance opposed by nations with stronger reliance on the more participative sources of guidance. Since the verticality index incorporates reliance on each of the three sources that were most frequently drawn upon, it provides the key index of cultural difference that can be derived from this survey. The results for 53 nations are given by Smith, Peterson, Schwartz et al. (2002), who also report test results of the relationship between these country scores and the prior value dimensions defined by Hofstede, Schwartz and Trompenaars. Substantial links are found between the verticality index and many of the earlier value dimensions. Thus, we can say that within different nations, choice among frequently employed guidance sources is rather strongly linked to prevailing values. However, we should not assume that guidance from frequently employed sources is the only contributor to a manager’s effectiveness. We can broaden our perspective by examining the ranks of nations on the verticality index in relation to some of the less frequently employed sources, such as reliance on widespread beliefs. Table 1 indicates the nations’ ranks for reliance on vertical sources, and separates those that show high, moderate or low reliance on beliefs that are widespread in one’s nation as to what is right. The distribution of nations in the table demonstrates that although there is some consistency with the results obtained by those who have studied values, there are also some interesting divergences. Discussions of cultural differences in approaches to management often focus on contrasts between U.S. and Japanese management, with the U.S. treated as an exemplar of individualism and Japan treated as an exemplar of collectivism. The present data shows that at least along the two dimensions portrayed in Table 1,
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Table 1. Nations Ordered by Verticality and Reliance on Widespread Beliefs. Rank for Reliance on Vertical Sources (“Hierarchical” versus “Participative”)
Reliance on Beliefs that are widespread in my nation as to what is Right (“Traditional” versus “Nontraditional”)
High
3. Indonesia 4. Malaysia 8. Philippines 9. Mexico 12. Korea 13. Iran 15. Nigeria 18. Bulgaria 20. China 21. Chile
High
Medium
Medium
1. Uganda 2. Kenya 4. Zimbabwe 7. Hong Kong 10. Pakistan 11. Turkey
41. Thailand
6. Jamaica
14. Poland 16. Tanzania 17. Spain 20. Lebanon 22. South Africa 23. Australia 24. Greece, Japan
26. India 30. Romania 33. Singapore
Low
28. USA 31. Macao 32. Brazil 34. Belarus 36. Argentina 37. Slovakia 39. Sweden 43. Italy
Low 45. Norway 47. Colombia 50. Netherlands 52. Denmark
26. Ukraine 29. Portugal
35. New Zealand 38. Israel 40. France 41. UK 44. Iceland 46. Czech Republic 47. Austria 49. Germany 51. Hungary 53. Finland
U.S. and Japanese reliance on guidance sources is relatively similar. Within the full range of nations sampled, this particular contrast is much less salient than many others. Managers from the European nations clustered at the bottom right section of the table report stronger reliance on their own experience and that of their subordinates than do U.S. managers. Managers from the nations clustered at the upper left part of the table report greater reliance on superiors, formal rules and widespread beliefs than do Japanese managers. Some of the contrasts between these results and those obtained for instance by Hofstede may relate to the different dates at which the surveys were conducted and the precise nature of the samples.
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However, at least some of the differences are likely to be due to the focus of this project on sources of guidance rather than values. An example will illustrate the ways in which divergences arise between values data and sources of guidance data. Hofstede found that Latin American nations were high on Power Distance, which is widely interpreted to mean that hierarchy is very important in Latin American nations. In contrast, the present data shows that managers in Latin American nations report relatively infrequent reliance on their superiors, and rather frequent reliance on co-workers. This is most evident in the case of Colombian managers, but similar though weaker effects were found in Argentina, Brazil and Chile (Smith, Peterson, D’Amorim, Davila et al., 1999). The likely explanation is that managers in these Latin American nations give their superiors respect and deference and attempt to satisfy their wishes, but in exploring how to achieve this, they rely strongly on peers, rather than consulting superiors directly. In a separate study that showed similar results, Morris, Podolny and Ariel (2000) found that Spanish managers compared to U.S., German and Chinese managers in a multinational bank expressed a much lower degree of “filial loyalty” to their superiors and much stronger reliance on their peers. In contrast to these results from Hispanic cultures, Hofstede’s characterization of respondents in sub-Saharan Africa as high on Power Distance is consistent with present results. A strong reliance on formal rules and superiors as sources of guidance was reported consistently throughout the region (Munene, Schwartz & Smith, 2000). Focus on the sources of guidance can help in this way to differentiate the types of hierarchical relationships that need to be viewed separately if we are to make valid predictions about issues faced by multinational enterprises in different locations. Thus far, the discussion has focused on cultural contrasts clarified by distinguishing reliance on vertical sources from reliance on widespread beliefs. Table 2 provides a similar analysis, focusing instead upon reliance on unwritten rules. This table shows that the majority of nations reporting high reliance on unwritten rules also rely strongly on vertical sources of guidance. This is perhaps unsurprising because in the context of hierarchy and a structure characterized by formal rules, it is easier for junior managers to anticipate the wishes of their seniors. However, several European nations shown in the lower left segment of the table demonstrate a combination of reported reliance on participative sources and high reliance on unwritten rules. This pattern is of particular interest in the present context because it describes a profile that may be distinctively problematic within multinational companies and joint ventures. Learning the nature of a tacit organizational culture is likely to be more challenging in contexts lacking hierarchical guidance. For instance, the table shows a marked contrast between the data from France and Germany, with German respondents scoring particularly
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Table 2. Nations Ordered by Verticality and Reliance on Unwritten Rules. Rank for Reliance on Vertical Sources (“Hierarchical” versus “Participative”)
Reliance on “Unwritten Rules as to How we Usually Do Things around Here” High
Medium
High 3. Indonesia 7. Hong Kong 8. Philippines 11. Turkey 12. Korea 13. Iran
Medium
21. Chile 23. Australia 24. Greece 29. Portugal 31. Macao 33. Singapore 36. Argentina 37. Slovakia 38. Israel 40. France
4. Malaysia 4. Zimbabwe
1. Uganda 2. Kenya 6. Jamaica
9. Mexico 10. Pakistan
17. Spain 18. Bulgaria 20. Lebanon 20. China 22. South Africa 26. India 28. USA 32. Brazil
14. Poland 15. Nigeria 16. Tanzania
24. Japan 26. Ukraine 30. Romania 34. Belarus
35. New Zealand
41. UK Low 44. Iceland 47. Colombia 47. Austria 50. Netherlands 53. Finland
Low
39. Sweden 41. Thailand 43. Italy 45. Norway 46. Czech Republic 49. Germany 51. Hungary
52. Denmark
low for reliance on unwritten rules. Lichtenberger and Naulleau (1993) found that among 216 Franco-German joint ventures, cross-cultural misunderstandings were among the most frequently cited problems. Field staff reported that their principal problem was persuading headquarters staff that their difficulties were due to cultural differences. Hofstede, Soeters and van Twuyver (1995) reported on the failure of joint Dutch-German-Belgian cross-border police patrols in a similar way. Failure was attributed to Dutch officers’ preference to treat offenders flexibly on the basis of unwritten rules and the German officers’ unwillingness to do so.
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AREAS OF APPLICATION Multinational enterprises are faced with a rich variety of conflicting imperatives, each providing strong arguments in favor of either centralization or diversification. These imperatives are resolved by different enterprises in many different ways, contingent on the nature of the markets they serve, the types of technology in which they are engaged, the needs of particular organizational functions and the values prevailing in the parent country (e.g. Brewster, 2001). The types of tacit knowledge represented by managers’ choices between guidance sources have a more direct influence on some of these contingencies than on others. In identifying areas of particular interest, it is first important to make a distinction between levels of analysis. The country scores discussed above are expressed as country-level aggregates. At this level of analysis, we might expect to generate some understanding of what happens when particular multinational enterprises seek to implement a globally homogeneous policy, especially one that has direct relevance to tacit sources of knowledge. Policies in the human resource management area would be especially strong candidates for consideration here. At this level, we can also consider what happens when the guidance sources preferred by expatriate managers differ from those favored by host country nationals. Data on guidance source choices can also be expressed in terms of individual preferences. At this level of analysis, we can examine phenomena more directly linked to the traditional interests of leadership researchers. Are the same styles of leadership effective in all cultures? If there prove to be variations, can these be explained in terms of available theories of cultural difference? These issues will be explored in turn.
COUNTRY-LEVEL CONTRASTS Multinational enterprises exist that bring together persons from nations in each of the four corners of Table 1. However some combinations are more frequent and have been better studied than others. The shorthand labels indicated in the table will be used to identify the country clusters.
Participative Non-Traditional Enterprise in a Traditional Hierarchical Context To follow the dictates of Table 1 rigorously would require the study of a Finnish company operating in Indonesia. Lacking such a study, we consider instead Worm’s (1996) delightfully titled analysis of a series of Nordic companies
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operating in China, Vikings and Mandarins. Worm explores how Nordic managers’ preferences for policies considered fair and effective in Western contexts could be made compatible with traditional Chinese beliefs. Drawing on case study material, Worm showed how Nordic managers seek to give face to their associates by introducing policies in ways that give respect to age and build up trust over time. The procedures whereby the Nordic managers gave face to their Chinese managers often left them uncomfortable, feeling that they had not spoken as directly and honestly as they would wish. Nonetheless, Worm argues that this type of compromise is the most effective way to manage this particular cultural contrast. The manager of a Coca-Cola bottling plant in China described a similar instance. Faced with subordinates’ demands to appoint their relatives to jobs within the plant, the manager established budgets for each of his subordinates and told them that they could hire whomever they chose, as long as they operated within their allocated budgets. This provided an incentive to hire only relatives who would be effective in the jobs, without any subordinates’ loss of face. Smith, Wang and Leung (1997) provided a more extensive sampling of issues arising between Western managers and their Chinese counterparts in joint venture hotels. They showed that in handling problematic work events with their superiors, Chinese subordinate managers were often aware that following traditional procedures would prove ineffective, whereas talking directly about problems would be more successful. However, in most instances they continued to rely on the less effective ways of handling events. The contrast between these results and the effective procedures identified by Worm is presumably due to the fact that, at the time of the study, the Western hotel managers had given insufficient attention to diagnosing and addressing the cultural issues with which they were faced.
Participative Non-Traditional Enterprise in a Non-Traditional Hierarchical Context The scores in Table 1 for nations in sub-Saharan Africa indicate relatively low reliance on widespread beliefs. This could be because respondents’ perceived that their role as managers within organizations differentiated them from the traditional beliefs that prevail in society at large. Alternatively, it is possible that they were thinking more in terms of differentiating their beliefs from those prevalent in other tribal, regional or religious groupings than their own. In any event, the emphasis here is upon the direct contrast between managers from Northern Europe, who may prefer to implement policies on the basis of negotiation and participation, and managers in Africa who expect hierarchical relations to prevail. The European managers will only be effective if they can find ways of ensuring that their decisions
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are based on an adequate upward flow of required information. This may not be readily forthcoming in settings where there are a wide variety of conflicting beliefs and loyalties among their subordinates.
Hierarchical Enterprise in a Participative Context One of the more striking findings of the guidance source project was the greater reliance on vertical sources by both U.S. and Japanese managers than that found among European managers. This pattern of results may help to illuminate some of the experiences had by U.S. and Japanese companies operating in Europe. Holden’s (2002) case study of Matsushita underlined the way in which control of the company’s vision and policies remained very firmly centered in Japan. This is clearly visible in some Japanese joint ventures in Europe. In one instance, meetings would take place on the basis that a European venture partner delegated authority to local managers to handle a situation. However, local Japanese managers referred all decisions to Japan after each meeting and produced confirmation or dissent from each day’s decisions only on the next day. U.S. companies frequently prefer to promulgate a uniform set of policies, concerning for instance, equal opportunities or appraisal systems, and then seeking to implement those policies uniformly across Europe, or indeed across the globe. In contrast to the Japanese position, this approach to HRM policy need not require constant reference back to the U.S., but the demand for uniformity rather frequently raises difficulties for European managers seeking to accommodate the cultural and legislative diversity of European nations (Brewster, 1995). The present line of analysis suggests that the push for uniformity would raise more problems in Europe than elsewhere, since neither hierarchy nor tradition is a strongly endorsed source of guidance in this region. Janssens, Brett and Smith (1995) showed how the supposedly uniform safety policies of a U.S. multinational firm were reinterpreted by local employees in France and Argentina, in ways that were consistent with local value priorities.
INDIVIDUAL-LEVEL ANALYSES While culture-level contrasts can provide indications of probable difficulties in implementing global versus local policies, the study of individual preferences for guidance sources relates more closely to the concerns of leadership theorists. It is only recently that a number of multiple-nation studies of leadership have started to become available (Dorfman, 1996). Comparisons of leadership between just a few nations may reveal similarities or contrasts. With a large number of nations
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sampled, the possibilities are enhanced. One may test the proposition that there are universal attributes of effective leadership. Conversely, one can test whether the differences in effective leadership behavior at different locations are due to differential sampling, or whether it is in fact the case that different styles of leadership work better in different cultural contexts. The GLOBE project has so far yielded evidence in favor of a universal preference for certain leadership traits, and of cultural variability in preference for other traits (Den Hartog, House, Hanges et al., 1999). Subsequent culture-level analyses indicated that within 22 European nations, preference for particular groupings of traits was correlated significantly with the dimensions of cultural variation identified by Smith et al. (1996) and portrayed in Fig. 1 (Brodbeck, Frese, Akerblom et al., 2000). More recent analyses of the GLOBE data do begin to show a clearer picture of the depth of cultural differences in preferred leader styles. Dorfman, Hanges, Brodbeck et al. (in press) identified the clusters of leader traits that were preferred within each of ten clusters of nations. To carry this further, we need data that show how individual traits are actually expressed in the context of particular cultures. The sources of guidance data are relevant to this issue, since ratings of how well events had been handled were also collected. Analyses confirm the importance of making a clear distinction between culture-level and individual-level analyses. Smith and Peterson (2000) showed that when the total data set is analyzed at the individual level, managers who rely on their own experience and training are found to perceive events as having been handled most effectively. This effect is reminiscent of the “fundamental attribution error” postulated by social psychologists (Ross, 1977). Good outcomes are attributed to one’s personal skills, while failures are attributed to the deficiencies of others. In contrast, at the culture level, events are rated as having been best handled in the cultures where there is greatest reliance on subordinates. Both of these types of analysis test whether there are global uniformities in the relationship between how events are handled and whether they work out well. However, what is most needed are analyses that look at the interactions between the two levels of analysis. Is reliance on one’s own experience more effective in some cultures than in others, for instance in participative cultures versus hierarchical cultures? Is reliance on vertical sources more effective in vertical cultures? No analyses of this type are yet available.
CONCLUSIONS In developing models of effective global leadership, we need to find the most appropriate conceptual and methodological tools. In this chapter, two particular perspectives have been emphasized. First, there may be more useful methods
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of classifying global cultural differences. The cultural differences that matter in cross-national enterprises have more to do with interpretation of what is going on than with fundamental clashes in values. Studying managers’ sources of guidance may provide us closer access to these processes. Secondly, we need to make much sharper distinctions between the different types of possible cross-cultural data analyses. Culture-level analyses may be helpful in predicting the viability of globally implemented HRM policies. Individual-level analyses can illuminate more precisely what actually happens between leaders and work teams in different locations. If we wish to maximize the practical utility of these types of analysis, we will use procedures that not only search for those elements of leadership that may be universal, but which also estimate the degree to which effects vary in different cultural locations.
REFERENCES Brewster, C. (1995). Towards a “European” model of human resource management. Journal of International Business Studies, 26, 1–22. Brewster, C. (2001). Human resource practices in multinational companies. In: M. Gannon & K. L. Newman (Eds), Handbook of Cross-Cultural Management. Oxford, UK: Blackwell. Brodbeck, F. C., Frese, M., Akerblom, S. C., & et al. (2000). Cultural variation of leadership prototypes across 22 European countries. Journal of Occupational and Organizational Psychology, 73, 1–29. Den Hartog, D. N., House, R. J., & Hanges, P. J. (1999). Culture-specific and cross-culturallygeneralizable implicit leadership theories: Are attributes of charismatic/transformational leadership universally endorsed? Leadership Quarterly, 10, 219–256. Dorfman, P. W. (1996). International and cross-cultural leadership. In: B. J. Punnett & O. Shenkar (Eds), Handbook of International Management Research. Oxford, UK: Blackwell. Dorfman, P. W., Hanges, P., Brodbeck, F. C., & 170 co-authors (in press). Leadership prototypes and cultural variation: The identification of culturally endorsed implicit theories of leadership. In: R. J. House, P. Hanges, M. Javidan, P. W. Dorfman & V. Gupta (Eds), Leadership and Organizations: A 62 Nation GLOBE Study. Thousand Oaks, CA: Sage. Hanges, P. J., Dickson, M., & Lim, B. C. (2002). Network analysis of the centrality of leadership constructs across cultures (in press). Hofstede, G. (1980). Culture’s consequences: International differences in work-related values. Beverly Hills, CA: Sage. Hofstede, G. (2001). Culture’s consequences: Comparing values, behaviors, institutions and organizations across nations. Thousand Oaks, CA: Sage. Hofstede, G., Neuyen, B., Ohayv, D., & Sanders, G. (1990). Measuring organizational cultures: A qualitative and quantitative study across 20 cases. Administrative Science Quarterly, 35, 286– 316. Hofstede, G., Soeters, J., & van Twuyver, M. (1995). Culture’s consequences and the police: Crossborder cooperation between police forces in Germany, Belgium and the Netherlands. Policing and Society, 5, 1–14.
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Holden, N. J. (2002). Cross-cultural management: A knowledge management perspective. Harlow, UK: Financial Times: Prentice Hall. House, R. J., Hanges, P., Javidan, M., Dorfman, P. W., & Gupta, V. (in press). Leadership and Organizations: A 62 Nation GLOBE Study. Thousand Oaks, CA: Sage. Janssens, M., Brett, J. M., & Smith, F. J. (1995). Confirmatory cross-cultural research: Testing the viability of a corporate-wide safety policy. Academy of Management Journal, 38, 364–382. Lichtenberger, B., & Naulleau, G. (1993). Cultural conflicts and synergies in the management of French-German joint ventures. In: P. S. Kirkbride (Ed.), Human Resource Management in Europe: Perspectives for the Nineties. London: Routledge. Morris, M. W., Podolny, J. M., & Ariel, S. (2000). Missing relations: Incorporating relational constructs into models of culture. In: P. C. Earley & H. Singh (Eds), Innovations in International and Cross-Cultural Management. Thousand Oaks, CA: Sage. Munene, J. C., Schwartz, S. H., & Smith, P. B. (2000). Development in sub-Saharan Africa: Cultural influences and managers’ decision making. Public Administration and Development, 20, 339– 351. Peterson, M. F., & Smith, P. B. (2000). Sources of meaning, organizations and culture: Making sense of organizational events. In: N. M. Ashkanasy, C. P. M. Wilderom & M. F. Peterson (Eds), Handbook of Organization Culture and Climate. Thousand Oaks, CA: Sage. Ross, L. (1977). The intuitive psychologist and his shortcomings: Distortion in the attribution process. In: L. Berkowitz (Ed.), Advances in Experimental Social Psychology. Orlando, FL: Academic. Schwartz, S. H. (1992). Universals in the structure and content of values: Theoretical advances and empirical tests in 20 countries. In: M. P. Zanna (Ed.), Advances in Experimental Social Psychology. Orlando, FL: Academic. Schwartz, S. H. (1994). Beyond individualism/collectivism: New cultural dimensions of values. In: U. Kim, H. C. Triandis, C. Kagitc¸ibasi, S. C. Choi & G. Yoon (Eds), Individualism and Collectivism: Theory, Method and Applications. Thousand Oaks, CA: Sage. Smith, P. B., Dugan, S., & Trompenaars, F. (1996). National culture and managerial values: A dimensional analysis across 43 nations. Journal of Cross-Cultural Psychology, 27, 231–264. Smith, P. B., & Peterson, M. F. (1988). Leadership, organizations and culture: An event management model. London, UK: Sage. Smith, P. B., Peterson, M. F., D’Amorim, M. A., Davila, C., & et al. (1999). Leadership in Latin American organizations: An event management perspective. Interamerican Journal of Psychology, 33, 93–120. Smith, P. B., & Peterson, M. F. (2000). How leaders handle work events: Individual and culture-level analyses. Paper given at International Congress of Psychology, Stockholm, Sweden (July). Smith, P. B., Peterson, M. F., Schwartz, S. H., & 36 co-authors (2002). Cultural values, sources of guidance and their relevance to managerial behaviors: A 47 nation study. Journal of CrossCultural Psychology, 33, 188–208. Smith, P. B., Wang, Z. M., & Leung, K. (1997). Leadership, decision making and cultural context: Event management within Chinese joint ventures. Leadership Quarterly, 8, 413–431. Trompenaars, F. (1993). Riding the waves of culture: Understanding cultural diversity in business. London, UK: Brealey. Worm, V. (1996). Vikings and mandarins: Sino-Scandinavian business cooperation in cross-cultural settings. Copenhagen: Copenhagen Business School.
THE CHINESE LEADERSHIP THEORY Wenquan Ling and Liluo Fang ABSTRACT Two interrelated theoretical schemes on leadership are presented in this paper. One is the Chinese CPM leadership behavior model, and the other, the Chinese implicit leadership theory. The CPM model recognizes three factors: Moral Character (“C” factor), Performance (“P” factor) and Maintenance (“M” factor). The Chinese implicit theory on leadership differentiates four trait factors: Personal Morality, Goal Efficiency, Interpersonal Competence, and Versatility. As such, it corresponds well with the CPM theory’s threefactor model. Both of these studies point to the salience of a cultural aspect. It has been demonstrated in the Chinese cultural context that the Chinese still place key importance on the moral character of their leaders and their behavior.
FOREWORD Recently strong academic interest has focused on the inter-relationship between management and culture. In our research work on leadership behavior and traits, it is clearly important for us to understand what aspects of overseas theories and methods are relevant to our needs, so that subsequently they can be synthesized and applied to China. Our attempts to formulate a Character, Performance and Maintenance (CPM) model on Chinese leadership behavior, and a Chinese implicit theory on leadership traits is documented and serves to illustrate this point.
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THE CHINESE CPM LEADERSHIP BEHAVIOR MODEL The research work on leadership behavior assessment has largely been based on behavior theories. Recognition of the limitations of the traits theory on leadership led Ohio State University scholars to pioneer the development of studies on leadership behavior. A Leader Behavior Description Questionnaire (LBDQ) to assess leaders (Halpin, 1954) was developed by the Personal Research Board of Ohio State University. Later, Halpin and Winer (1975) identified “Consideration” and “Initiative Structure” as the two primary behavior factors determining leadership. At the same time, similar studies on leadership behavior were conducted in other American research centers. For instance, The Survey Research Center at the University of Michigan investigated the modes of leadership found in high production and low production units, and differentiated the behavior of leaders into two factors – that of “Employee Orientation” and “Production Orientation.” While those at the Research Center for Group Dynamic postulated that all groups were concerned with the functions of fulfillment and maintenance, this was later adapted into the Performance/Maintenance (PM) theory for analyzing leadership (Misumi, 1966, 1978, 1985). While appreciating Western leadership theories’ emphasis on “job” and “interpersonal relationship” factors, the Chinese researchers were alert in pointing out that assessment of a leader should take into consideration not only “abilities” but also “moral character.” This implies that in the Chinese context, both abilities and morals would constitute important criteria for leadership and its assessment. Historically, the Chinese were equally concerned, if not more, with political morals as a standard for evaluating leaders. The selection of cadre, for instance, has been judged always in terms of an individual’s moral standing. Therefore, in contrast to the Western culture, it seems reasonable to hypothesize that in measuring leadership behavior in China, the appropriate assessment scale should be constructed in terms of three factors – P factor (Performance), M factor (Maintenance), and C factor (Character and Morals). In the following section, we describe our endeavors at constructing such a leadership CPM scale for assessing Chinese leaders in business settings.
The CPM Scale and Its Construction There are two principal parts of the CPM scale. The first is the Situation Scale in which 40 items are differentiated in describing each of eight “situational” factors. These factors include:
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work motivation; degree of satisfaction toward remuneration; conditions for promotion and advancement; mental health; teamwork; effectiveness of conferences or meetings; communication of information; and performance norms or standards.
These situational factors, each represented by five measurement items, are developed primarily for testing subordinates’ models, as well as serving as indirect external indicators for assessing leaders’ behavior. The second part of the CPM Scale is the assessment scale of leadership behavior, described by the three main factors of Character, Performance and Maintenance. Each of these is in turn measured by 10 items. A five-point rating scale was used to respond to these, and subordinates were asked to assess their supervisors on the five-point scale. In order to ensure the universal applicability of the scale, those items specific to particular enterprises and factories were eliminated. While the measuring items on the Performance and Maintenance functions were adopted and adapted from the established Japanese literature, it was necessary for us to invent and formulate group items for measuring the Character dimension. Upon its completion, the CPM scale was pilot-tested at two research institutes using R-type cluster analysis for the items. Altogether, the scale was edited and revised three times. After its first revision, the scale was applied to 49 heads and deputy heads of government departments/bureaus, from whom a total of 1,133 effective data cards of assessment were obtained. In addition, this revised instrument was also administered to the senior staff at one of the research institutes, yielding another 387 effective data cards. As expected, the 30 items adapted to the revised CPM Scale tended to cluster in three groups, with the exception of two or three items, which did not fit and were dropped in the second revision. The process resulted in a third version of the instrument – the CPM scale. This third edition of the CPM Scale was also tested at the institute. Forty-seven department heads and division officers assessed the leadership qualities of six directors and vice-directors of the institute, resulting in 282 cards. Using the cluster analysis method, the 30 items were consolidated into three clusters associated with the Character, Performance and Maintenance leadership factors. The research plan then called for the application of this newly constructed CPM scale to the assessment of the leaders in more than 40 enterprises and work organizations.
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Table 1. Reliability Coefficients of the CPM Scale and C, P, M, Subscales (N = 282). Reliability formula
CPM
C
P
M
rn rtt Cronbach’s Alpha
0.820 0.959 0.954
0.909 0.908 0.923
0.910 0.897 0.895
0.927 0.908 0.925
Reliability and Validity of the CPM Scale Reliability and Validity Testing The reliability of the revised CPM Scale was tested using the Spearman-Brown Split-Half formula (rn), the Cronbach Split-Half formula (rtt), and Cronback’s Alpha coefficient. Table 1 illustrates the reliability coefficients found among 30 variables on the CPM Scale, and the reliability coefficients for the sub-scales of C, P and M. As can be seen in the table, the reliability coefficients are above 0.820, indicating a high level of reliability in these items. Three methods were used for testing the construct validity of the CPM Scale’s third edition – correlation coefficients, cluster analysis and factor analysis. Correlation Coefficients Table 2 shows the corresponding correlation matrix between the 30 CPM variables, as well as each of the C, P and M factors. It is evident that the correlation coefficients between each of the C, P and M factors, and their respective corresponding clusters of 10 variables, are all significantly higher than the remaining 20 variables. This shows that the internal structure of the CPM Scale is quite stable. Table 2. Correlation Matrix of Variables C, P, M. Item 41 42 43 44 45 46 47 48 49 50
C
Item
P
Item
M
0.725 0.716 0.794 0.733 0.808 0.804 0.752 0.790 0.760 0.815
51 52 53 54 55 56 57 58 59 60
0.453 0.487 0.412 0.424 0.569 0.461 0.436 0.541 0.583 0.362
61 62 63 64 65 66 67 68 69 70
0.810 0.745 0.730 0.840 0.789 0.730 0.818 0.759 0.745 0.718
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Fig. 1. The Cluster Diagram for CPM and Factors.
Cluster Analysis Figure 1 is the cluster diagram of the leadership behavior variables (items 41–70) of the CPM scale. The diagram shows that the results of cluster analysis conform to those predicted by the scale design. That is, items 41–50 cluster to form one cluster, the C factor; items 51–60 cluster to form another cluster, the P factor; and items 61–70 cluster to form a third cluster, the M factor. These results enabled us to contribute to the construct validity of the CPM scale and its ability to differentiate among the three independent factors that we intended to measure. Factor Analysis Factor analysis on the results derived from 8,792 subjects was used to examine the structure validity of the CPM Scale. Table 3 shows the varimax rotated factor model matrix. The percentage of variance explained for Factor 1 (C) is 80.03%, and its alpha coefficient is 0.95. For Factor 2 (P), the variance explained is 8.19%, and its alpha coefficient is 0.93. Factor 3 (M)’s variance explained is 3.60%, and the alpha coefficient is 0.95. The three factors not only help explain 91.82% of the total variance in the items, but they also enable a correlation matrix to be reconstructed, in a way affirming the hypothesis. These results agree with the results of the preceding correlation exercise and cluster analysis. This demonstrates the soundness of the CPM Scale’s structure configuration. Difference between the CPM Model and Western Model The CPM model developed in the Chinese context differs from the Western model largely because of the explicit recognition it gives to the moral character factor
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Table 3. The Factor Analysis of CPM Scale (N = 8792). Factor 1 (C) Items 46 48 43 49 47 50 42 45 41 44 Variance explained Total Alpha
Factor 2 (P)
Factor 3 (M)
Factor loading
Items
Factor loading
Items
Factor loading
0.74 0.73 0.70 0.69 0.67 0.66 0.65 0.63 0.62 0.61 80.03%
56 52 54 53 58 60 57 51 55 59
0.77 0.75 0.74 0.71 0.68 0.67 0.64 0.64 0.63 0.62 8.19%
64 67 63 68 70 61 62 69 65 66
0.65 0.64 0.63 0.62 0.61 0.59 0.58 0.58 0.57 0.57 3.60%
91.81% 0.95
0.93
0.95
in leadership behavior analysis. There are several reasons why such a conceptual importance is attached to the moral factor. The first is the strategic emphasis placed on the moral standing of individuals in the selection and assessment of cadres within China’s system of administration. The second is the weight of the traditional culture and its ethical prescription, which exalts the moral integrity of individuals as leaders. A person with a dubious moral reputation is unlikely to gain approval and support as a leader no matter how competent he or she appears to be. Chinese have emphasized the idea of having both morals and ability, and pay special attention to moral character when they assess a person. Even now this ethical concept still deeply influences people’s behavior. The third reason stems from the weakness of the legal system of social control inside China, which has been long affected by feudalistic tradition. Thus, the moral integrity of leaders is considered very important for safeguarding social justice where a formal body of rules and regulations has yet not been developed adequately. The fourth reason is associated with the highly centralized power structure of China’s political system in which authoritarianism and subordinates’ submission to authority prevails. The Chinese have always placed a premium on the benevolence of enlightened leaders whose moral character enables them to lead and control with tolerance and forbearance. Therefore, the Chinese always place their hopes on enlightened leaders, expecting persons of high character and great prestige to remedy the abuses of officialdom.
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These differences in cultural and social backgrounds account for the differences between the Chinese model of leadership behavior assessment and the Western model. The CPM model reflects the Chinese national character. Misumi (1966), who pioneered the formulation of the PM theory of leadership, has treated the subject largely as a group function. A group was seen to perform the dual functions of objective fulfillment (performance) and maintenance/strengthening, while a leader’s function was to steer the group to achievement of these functions – i.e. the P (performance) and M (maintenance) functions. It is agreed that leadership effects arise from these group functions but also depend on a leader’s personal character and qualities. Therefore, the concept of leadership behavior should include the group function factor as well as the leader character factor. The CPM model is a reflection of this new leadership concept. The CPM concept is neither a pure leadership trait theory nor a pure behavior theory. Instead, it is a combination of the elements of both, incorporating properties of situational analysis in its treatment.
The CPM Theory and Leadership Dynamics As noted, the conventional CPM theory as developed by Misumi (1966, 1978, 1985) deals with the question of leadership dynamics. Within his model, factor P (performance) is derived from group objective fulfillment, which is in turn denoted by such factors as pressure and plan. Factor M (maintenance) is the function of group maintenance and strengthening – a condition necessary for an organization to exist and develop. Leadership dynamics, however, are given a more explicit treatment in the new CPM model. Factor P and factor M represent direct influences on the individual who assumes the leadership function and behavior. There are also the leader’s own indirect influences, which are described under factor C. It is argued that a leader, through his exemplary behavior, can inspire his subordinates to higher levels of motivation at work – not to mention its ameliorative effects in reducing subordinates’ discontent. Although subtle and indirect (and often not expressed), factor C plays an important incremental and magnifying role and, as such, is often more important than direct orders and commands in the leadership exercise. The effects of Factor C, P and M are shown in Fig. 2. A question may be raised as to whether such a function as moral character can be replaced by the maintenance function of leadership. The answer is negative in view of the distinctive nature of both. Thus, the maintenance function describes the relationship between the leader and his subordinates, with its effects on the
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Fig. 2. CPM Dynamics Model.
subordinates felt directly. The moral character function of is more or less intrinsic to the leader himself and affects subordinates only indirectly. (See the Kennedy, Fu & Yukl chapter in this volume and Yeh, 1995, for a parallel discussion on the indirect aspects of leader influence.) In other words, three distinctive roles are recognizable for these three functions. The performance function is work-oriented to work, while the maintenance function is directed at other persons (i.e. subordinates). The moral character function is innate to the individual leader. It is then evident that a leader is able to give full play to his leadership ability provided that he correctly handles the relationship between work, related other persons (subordinates) and himself. Such a relationship among the three factors of C, P and M is one of multiplication and not just addition. It is hence possible to restate the functional relationship for the variable leadership effects in the formula: E = C × P × M.
Applications of the CPM Model The CPM leadership model offers a practical instrument for personnel selection and assessment in terms of leadership qualities and also facilitates feedback to
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the individuals. It has proved particularly useful in China’s cadre system reforms. Earlier, cadres were selected largely by impressionistic and qualitative processes of assessment that were time- and energy-consuming. The systematic application of the CPM model is effective as an instrument for selecting and training cadres in leadership skills. The practices of reform need to shift the assessment of cadres from the qualitative method to the quantitative method, and to combine these two methods. During the last few years, the CPM leadership instrument has been applied with considerable success to almost 100 work organizations in China (67 bureaus of government departments and 10 more enterprises). Good effects were achieved. Some merits in its application are summarized: (1) The CPM Scale can be used in check on cadres. Presently, the task of checking on cadres is hard for the personnel departments. For example, the Personnel Bureau of a city could not complete the task of checking on the leaders of thousands of enterprises and administrations throughout one year using the qualitative method. But using the CPM method, the leader group of one unit can be assessed in one or two hours. Therefore, the CPM Scale has been well received by practice departments. (2) Providing a clear and concrete orientation to the leader for improving his (or her) leadership method is the main function of the CPM method. According to the scores of C, P and M factors and compared with the normal model (if there is not a normal model, than compared with the C, P and M means of all leaders in this unit), the leader will know his strong and weak points. Then he will improve and raise the leadership level. (3) The CPM Scale can be used for selecting the leaders and reserve leaders. By checking the CPM method, each leader has his C, P and M values. The results of comparing C, P and M values of each person with the results of qualitative check can be used as the reference basis for appointing a new leader group. In addition, the results of checks on cadres for several years in succession can also be used as the basis for selecting reserve cadres. (4) The CPM Scale can be used for arranging the leader group rationally. The rational arrangement of the leader group is an important factor in bringing the overall effects of the leader group into full play. Recent practices prove that many leader groups are not bad according a single member, but are not ideal according the overall group. The reason for this is the arrangement is not rational, so the overall superiority cannot be played. A lack of cooperation between leaders can influence the overall effect. This is a new research project for leadership science. According to the results of CPM method assessment, we can classify each leader type. The rational and optimum construction,
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which is formed by arranging the different leaders to groups, will heighten the overall effect of the leader group.
CHINESE IMPLICIT LEADERSHIP THEORY Leadership has been examined through explicit and implicit theories. The explicit theory is based on observation and evaluation of the leaders’ overt behavior. The implicit theory explores the covert conceptual structure regarding the definition of a leader, and what people think a leader should be. Consequently, one’s experience with a leader and description and evaluation of a leader are greatly influenced by one’s implicit leadership theory. In several explorations of leadership using implicit and explicit leadership theories, researchers have found similar factor structures among U.S. participants (Eden & Leviatan, 1975; Lord, Binning, Rush & Thomas, 1978). Implicit leadership traits are based on personal characteristics and attributes that followers expect in their leaders. These traits exist as cognitive structures and represent a potential, or tendency, for certain types of behavior (Bresnen, 1995; Kenney, Schwartz-Kenney & Blascovich, 1990; Kraus & Gemmill, 1990). Offermann, Kenney and Wirtz (1994) pointed out that implicit leadership theory can serve as the foundation for the study of leadership theory in U.S. participants, and identified eight major factors: Sensitivity, Dedication, Tyranny, Charisma, Attractiveness, Masculinity, Intelligence, and Strength. In the past two decades, many researchers have paid attention to the generalizability of implicit leadership theory (Bryman, 1987), especially the role of culture in leadership. Hofstede (1980) pointed out that many of the differences in leadership style, employee motivation, organizational structure, and so forth could be explained through the mental programming that takes place within different cultures. Bass (1990) indicated that cultural differences exist not only in terms of leaders’ goals and limits of authority, but also in leadership style and the conditions necessary for leadership. Ayman and Chemers (1983) said that leadership behavior was a function not only of overt leadership but also of the evaluator’s cultural background. The authors warned that the application of Western leadership theories, measures and research designs in other cultures might lead to inaccurate conclusions. The social-cultural environment, therefore, has a profound impact on leadership. Implicit leadership theory is based on the culture in which one lives; therefore, the content and factors of implicit Chinese leadership theory probably differ from those of Western theories. If this is true, then an understanding of the implicit Chinese leadership theory should be the first step in future examinations of Chinese
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leadership behavior (Ling, 1989). The goals of this study were: exploration of how Chinese people think about a leader; identification of the dimensions of the implicit Chinese concept of leadership; and examination of whether different social groups within China differ in their perceptions of implicit leadership traits.
Study 1: Scale Development Method Participants. The participants were all Chinese individuals recruited from two universities, a government training class, a factory, and an agency that deals with international affairs. The 133 participants (age statistics were not available) included cadres (civil workers for the government), students and factory workers. Procedure. In group settings, each participant received a sheet of paper with the following instructions printed on the top: “Please write 25 words or phrases describing leader characteristics.” We provided no definition of leader and set no time limit. Analysis. We obtained a total of 2,546 descriptive terms from the 133 participants, which was approximately 19 items per participant. We eliminated redundant words and phrases and counted frequencies for the remaining 690 items. We kept only those mentioned at least two times. Last, we combined some items with very similar meanings, leaving a total of 163 items. Scale. The final Chinese Implicit Leadership Scale (CILS) includes those 163 items, which we randomly ordered and placed on a Likert-type format (1 = totally uncharacteristic of a leader, 10 = very characteristic of a leader).
Study 2: Scale Administration Method Participants. We recruited a total of 622 participants (age statistics were not available) from Beijing, including cadres, factory workers, teachers, college students, and technicians (for a description of the participants’ demographics, refer to Table 4).
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Table 4. Demographic Characteristics of Participants. Characteristic
n
%
Gender Male Female
363 213
63.0 37.0
Age (in years) <25 26–35 36–45 46–55 >55
174 174 127 89 18
29.9 29.0 21.8 15.3 3.1
Occupation Cadre Worker Teacher Technician College student
133 140 152 21 140
22.7 23.9 25.9 3.6 23.9
Education level Elementary Junior high Senior high Community college University
15 71 123 131 236
2.6 12.3 21.4 22.7 41.0
Note: The totals are inconsistent because some participants did not complete items.
Procedure. We administered the CILS in group settings. Each participant received the CILS, along the following verbal instructions: “The list you just received contains many descriptive items. For each one of them, please evaluate how typical it is for a leader.” Again, we did not provide a definition of leader. There was no time limit, but the participants usually took 30–60 minutes to complete the CILS. Results Identification of factors. We deleted some incomplete and erroneous data, and the final sample consisted of 597 completed CILSs. Using the SAS statistical system and reviewing different factor solutions, we conducted a factor analysis and decided on a four-factor solution. With the factor loading of 0.40 as the decision point, each item loaded on only one factor. Thus, the factors were clearly separated from each other. Combined, the four factors for Chinese implicit leadership explained 91.28% of the total variance. Table 5 contains the four independent dimensions of Chinese implicit leadership as indicated by the four factors: Factor 1, Personal Morality; Factor 2, Goal
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Table 5. Factor Structure of Chinese Implicit Leadership. Factor/Item
Loading
1. Personal Morality Willing to be a public servant Honest Genuine Pragmatic Receptive to criticism Impartial Trustworthy Self-disciplined Incorruptible Use of self as a model
0.73 0.73 0.73 0.72 0.71 0.71 0.71 0.70 0.70 0.69
2. Goal Effectiveness Fortitude Visionary Decisive Deliberate Perceptive Scientific Competent Insightful Far-sighted Open-minded
0.66 0.66 0.64 0.63 0.62 0.62 0.62 0.61 0.60 0.59
3. Interpersonal Competency Seasoned Cautious Society skilled Mature Charming Glamorous Elegant Verbal skills Cheerful Steadfast
0.70 0.60 0.59 0.59 0.57 0.56 0.55 0.55 0.54 0.54
4. Versatility Multitalented Cheerful Psychologically knowledgeable Entrepreneur Sense of humor Appreciates arts Well read Multilingual Imaginative Many interests
0.56 0.55 0.54 0.52 0.52 0.52 0.51 0.46 0.43 0.41
% variance explained
a
35.79
0.96
23.88
0.94
18.17
0.89
13.44
0.92
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Effectiveness; Factor 3, Interpersonal Competency; and Factor 4, Versatility. Factors 1 and 2 consisted of more than 40 items with loadings of 0.40 and higher; Factor 3 had 30 items with loadings higher than 0.40; and Factor 4 had 13 items with loadings higher than 0.40. For each factor, the 10 items with the highest loadings appear in Table 2. The coefficients used to check the factor validity (see Table 5) were all quite high (a = 0.89–0.96), suggesting that the items within each factor presented a coherent measure of that dimension.
Relationship of Social Groups to Factors Our second goal was to examine whether implicit leadership traits varied among different social groups. Because the sample size was too small in some groups, we made changes. We eliminated the technician group (n = 21), leaving only four different occupational groups: cadres, factory workers, teachers and college students. In the age groups, we combined participants older than 55 years with those between 46 and 55. For the education levels, we combined the participants with an elementary education level and those with a junior high level to form one category – elementary/junior high. Using gender, age, occupation, and education levels as the four independent variables, we conducted a multivariate analysis of variance. According to the results, the effects of age, F (12, 1239) = 3.5, p < 0.001; occupation, F (12, 1207) = 5.79, p < 0.001; and education level, F (12, 1228) = 4.28, p < 0.001, were all significant, but the gender effect was not significant. We then conducted four separate analyses of variance on each of the four factors of Chinese implicit leadership (see Table 6). There were significant differences in all four implicit leadership trait factors among three social groups (age, occupation and education level), but not between Table 6. Results of Analysis of Variance on Chinese Implicit Leadership Factors. Factor
PM GE IC V
Age
Occupation
Education level
Gender
F (3, 471)
p
F (3, 459)
p
F (3, 467)
p
F (1, 470)
p
4.72 6.68 2.65 4.11
0.003 0.000 0.049 0.007
2.66 10.08 9.62 4.90
0.048 0.000 0.000 0.002
9.33 27.61 7.11 18.35
0.001 0.001 0.001 0.001
0.05 1.66 2.78 0.00
0.829 0.198 0.960 0.966
Note: PM = Personal morality, GE = Goal effectiveness, IC = Interpersonal competency, V = Versatility.
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Table 7. Mean Ratings on Chinese Implicit leadership Factors by Age, Occupation, and Education. Variable
PM
GE
IC
V
Age (in years) <25 26–35 36–45 >46
5.33 4.53 5.54 5.12
6.15 5.10 5.63 5.36
6.43 5.94 6.25 5.96
4.98 4.26 4.87 4.82
Occupation Worker Cadre Teacher College student
4.79 4.87 5.31 5.53
4.85 5.74 5.39 6.33
5.50 6.39 6.07 6.61
4.20 4.79 4.64 5.16
Education level Elementary/junior high Senior high Community college University
4.97 4.71 4.43 5.72
4.94 5.24 4.99 6.28
5.63 5.90 5.93 6.53
4.32 4.36 4.29 5.22
Note: PM = Personal morality, GE = Goal effectiveness, IC = Interpersonal competency, V = Versatility.
the two gender groups. Therefore, we presented only the results for the three social groups in Table 7.
GENERAL DISCUSSION Content of Chinese Implicit Leadership Theory The results revealed distinct factors (refer to Table 2), and the suggestion that one can use four separate dimensions to describe Chinese people’s conceptualization of leadership. The present outcome is quite different from the eight factors of leadership that Offermann et al. (1994) found with U.S. participants. The first factor is Personal Morality, accounting for 35.79% of the variance, and suggesting that the Chinese participants expect a leader to be willing to be a public servant, to have integrity and honesty, to be consistent in thought and word, to be willing to search for truth, to be fair, to serve as a role model, and to be willing to accept criticism from others and from him- or herself. Thus, the Chinese participants considered virtue the most important feature of leadership. In the eight factors mentioned earlier (Offermann et al., 1994), there seems to
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be nothing in the U.S. participants’ results that resembles the personal morality factor revered by Chinese participants. Perhaps the U.S. factor dedication comes closest to the Chinese factor personal morality. This finding indicates that, even today, 2,500 years after the time of Confucius, his traditional ethics continue to have tremendous influence on Chinese people. In contrast, people in the United States seem to concentrate on task ability and individual characteristics such as intelligence, attractiveness, masculinity and strength. The second factor is Goal Effectiveness, accounting for 23.88% of the variance. The Chinese participants expected the leader to have a broad vision and the ability to plan strategically for the future, to have a keen sense of perception, to keep an open mind, to have the willpower to do what is right, to be decisive, to be deliberate, to have outstanding ability, to appreciate scientific methodology, and to be insightful in maximizing others’ abilities. Among the U.S. factors, Intelligence, Masculinity and Strength seem to come close to the Chinese factor Goal Effectiveness. The third factor is Interpersonal Competence, accounting for 18.17% of the variance and associated with the skills that deal with the social environment. The Chinese participants expected the leader to be mature, sophisticated, straightforward, socially skilled, and effective in persuading others. They seemed concerned with not only the leader’s interpersonal skills but also his or her external charm. Therefore, they also expected the leader to have grace, good form, and to be elegant. These traits make the leader more attractive to others and, in turn, may be helpful to the leader in interpersonal relationships. Sensitivity, Attractiveness and Charisma are the U.S. factors that seem to parallel the Chinese Interpersonal Competence factor. The fourth factor is Versatility, accounting for 13.44% of the variance. The Chinese participants expected the leader to have command of knowledge, to be multitalented, to have broad interests, to be imaginative and willing to take risks, to have a sense of humor, and to be approachable. These characteristics represent the breadth of the leader’s talent and enable the leader to be flexible and versatile, thus helping the organization reach its goal and foster interpersonal relations as well as strengthening leadership effectiveness. We found no correspondence in the eight U.S. factors (Offermann et al., 1994), but other researchers have identified flexibility and versatility as important leadership traits (Hendrick, 1987; Kirkpatrick & Locke, 1991; Yukl, 1989).
Differences in Implicit Leadership Factors among Social Groups The results indicate that social groups that differed in age, occupation and education level also differed in their perceptions of implicit leadership traits; however, men
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and women did not differ. The following discussion addresses each social group that demonstrated significant differences on CILS factors. Age Differences The participants younger than 25 years gave the highest ratings on almost all CILS factors, reflecting the idealistic nature of youth. This age group also had the largest proportion of college students (140 of 174 participants); therefore, education may also have been a contributing variable. The 26–35-year age group gave the lowest ratings. This finding seems puzzling, but if one refers to history, this group grew up during the Cultural Revolution when chaos ruled. Most Chinese openly view the Cultural Revolution as an “error” today. Therefore, this group may have become very disenchanted with leaders. Also, this group missed the most schooling due to the Cultural Revolution; therefore, their lower levels of education may be another variable contributing to the lower ratings. An examination of the ratings for each of the four factors shows that all age levels gave the highest ratings to Interpersonal Competence, which reflects the importance placed on interpersonal harmony in a collectivist culture. Occupational Differences Participants’ occupations contributed to differences in ratings on Goal Effectiveness, Interpersonal Competence, and Versatility, but not for Personal Morality. The college students gave the highest ratings on all these three factors, whereas the factory workers gave the lowest ratings. Again, within each occupational group, Interpersonal Competence was rated the highest. Education Differences Groups that differed in education level showed significant differences in ratings on the Personal Morality, Goal Effectiveness, Versatility and Interpersonal Competence factors. The college participants gave the highest ratings to all CILS factors, whereas the other three education groups did not differ from each other. This finding may indicate that participants with higher education levels tended to be more idealistic, and want their leaders to have higher standards. At each education level, Interpersonal Competence was again rated the highest among all four factors. An examination of the all-social group differences suggests that education level may be the common underlying factor. There seems to be a positive linear relationship between education level and higher ratings given to CILS factors. Participants younger than 25 years of age were mainly college students. Those in the 26–35-year age range were mostly factory workers, who had the lowest level of education. Thus, education level seems to have been the major source of differences. Differences among the other three social groups (age, occupation
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and education) were caused primarily by variations in education. The higher the participants’ education level, the higher their ratings on each factor. Although the factor Personal Morality held the largest amount of variance, the fact that all social groups gave the highest ratings to the Interpersonal Competence factor suggests that the Chinese participants rated this factor as the most important leadership trait. This finding is quite consistent with the Chinese collectivist value. Chinese people constitute 25% of the world’s population, and China is increasing its contact with the rest of the world, as evidenced by Premier Jiang Zemin and President Bill Clinton’s visits to each other’s countries. Chinese tradition, values and perceptions are so different from those in the West that there is an urgent need to better understands each other’s culture. Western theories of leadership cannot be very effective when directly transposed onto Chinese people. The results of this study demonstrate the ways in which Chinese people view leaders and the meaning attached to leadership. The results also show that there are differences in implicit leadership theories not only between Chinese people and people in the United States, but also among the social groups within China. Previously, researchers of Chinese leadership have primarily used Western theories and have concentrated on the description of overt leadership behavior. Future researchers must continue to delve into the hearts and minds of the Chinese to find out the true Chinese meaning of leadership.
Dissimilarities between Chinese and American Theories of Implicit Leadership Implicit leadership theories, inasmuch as they are relativistic to and determined by culture, tend to vary in their content between different cultural contexts. This study throws light on how the Chinese approach contrasts with and departs from the American theories. In essence, they differ from each other’s in terms of the following: (1) Factor structure. This entails different sets and numbers of leadership factors between the Chinese and American theories. The Chinese theories have empirically established the four factors of personal morality, group effectiveness, interpersonal competence and versatility, while the latter, as demonstrated in Offermann’s model, identifies as many as eight dimensions of leadership. These include sensitivity, dedication, tyranny, charisma, attractiveness, masculinity, intelligence and strength. (2) Direction. This is positive for all dimensions of leadership in the Chinese theory and mixed in the American case, where some leadership factors may
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have negative connotations as well. This is illustrated by the tyranny factor, where the leader may be perceived as pushy, dominating, power-seeking, manipulative, selfish, conceited, loud and noisy or obnoxious, which is completely missing in the Chinese perceptions. (3) Specificity of the Chinese attention attached to the “personal morality” factor. This, although overlapping with the American system’s sensitivity and dedication factors, is not represented as an independent factor in the latter approach. To a certain extent, the morality factor is more or less unique in the Chinese view of leadership. As argued by the author(s) in an earlier study on leadership assessment, the moral character of the leader has to be equal in importance to the criteria of group performance and group maintenance (Ling, 1989). Corroborative evidence on the emphasis placed by the Chinese on the nexus of the moral factor is available in the works of Yang and Lee, and Hanno and Jones (Hanno & Jones, 1978; Yang & Lee, 1971; cited in Bond & Hwang, 1986). Their studies also reveal the importance attached by the Chinese on the strength of social morality when rating important figures such as father, mother, friend, teacher and self. (4) Other aspects. The Chinese attach relatively low significance attached to the Masculinity factor in analyzing leadership, in contrast to the salience with which leadership is represented in terms of this factor in America. Similarly, there exists a limited measure of resemblance between the American strength factor and the Chinese social effectiveness factor, as well as between the interpersonal competence factor in the Chinese theoretical scheme and the charisma and attractiveness factors in the American system. Nevertheless, these attributes are somewhat mutually distinct rather than identical, differing according to the ways that leadership has been viewed and appreciated in either the American or Chinese cultural perspective.
SUMMARY AND CONCLUSIONS Linkages between the Implicit Theory and Explicit Theory of Leadership Implicit leadership theories have been recognized for their inherent heuristic value, especially in contributing to a deeper understanding of the leadership phenomenon. This in turn may assist in the building of a more refined conceptual framework in the development of explicit theories on leadership. Somewhat distinct from its Western counterpart, a Chinese model of leadership behavior has been advanced by Ling Wenquan et al. (1987) utilizing the three factors of Character (C), Performance (P) and Maintenance (M). The first part of this chapter dealt with the model’s
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theoretical and empirical background. Its links with the traits-oriented implicit theory of leadership, presented in the second part of this chapter, are worth noting now. In the latter instance, the four dimensions of trait factors, as derived from the respondents’ definitions of their leader image, are personal morality, goal effectiveness, interpersonal competence and versatility. The variance explained by each of these four factors is correspondingly 35.79, 23.88, 18.17 and 13.44%. If seen through the criterion of variance explained, it is apparent that the first three factors are major factors, which correspond closely to the CPM factors in the leadership behavior model mentioned earlier. Even the fourth factor in the trait implicit theory, that of versatility, also appears implicitly analogous to the “P” (performance) factor within the CPM model. Given this correspondence between the two sets of factors listed under the explicit (behavioral) and implicit (trait-associated) theories on leadership, it may be legitimately assumed that the factor structure yielded by this study on the Chinese image of leaders’ traits lends support to and help validates the CPM instrument developed in our Chinese model of leadership behavior assessment.
Summary What have been presented in this paper are two interrelated theoretical schemes of leadership – one the assessment of leaders’ behavior and the other the delineation of leaders’ traits as reflected in people’s images, which are developed in the Chinese cultural context. The former can be labeled as the CPM model on leadership behavior, which recognizes explicitly a third factor, moral character (the C factor), among the Chinese in their cognitive process of leadership assessment. This factor also makes the model distinctive from the conventional instruments (in Western literature) of measuring leadership behavior, which previously concentrated on the other two factors of performance (the “P” factor) and maintenance (the “M” factor). The second theoretical scheme that delineates leaders’ traits, as reflected in people’s images, has yielded a Chinese version of the implicit leadership theory. This version presupposes the existence of the leadership image in people’s mind, which in turn affects the perception of the actual leader and his behavior. Evidently, cultural diversities give rise to important variations in perceptions of leaders and leadership. Therefore, this study demonstrates how the Chinese perspective of leadership traits differs significantly from that of the American perspective – notably in terms of the factor structure and contents of these factors. The Chinese implicit theory of leadership has been able to differentiate a mix of four trait factors – personal morality, goal effectiveness, interpersonal competence
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and versatility. As such, it corresponds well with the three-factor model of the CPM theory on leadership assessment and helps confirm the latter’s validity as an instrument for assessing leadership behavior in the Chinese society. Evidently, both of these conceptual exercises on leadership point to the salience of a cultural aspect. It has been demonstrated in the Chinese cultural context that the Chinese still attach key importance to the moral character of their leaders and their behavior.
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Misumi, J. (1978). The behavioral science of leadership. Tokyo, Japan: Yuhikaku. Misumi, J. (1985). The behavioral science of leadership (English ed.). M. F. Peterson (Ed.). Ann Arbor, MI: University of Michigan Press. Offermann, L. R., Kennedy, J. K., & Wirtz, P. W. (1994). Implicit leadership theories: Content, structure, and generalizability. Leadership Quarterly, 5, 43–58. Yukl, G. (1989). Leadership in organizations (2nd ed.). Englewood Cliffs, NJ: Prentice Hall.
CORPORATE CULTURE AND ORGANIZATIONAL EFFECTIVENESS: IS THERE A SIMILAR PATTERN AROUND THE WORLD? Daniel R. Denison, Stephanie Haaland and Paulo Goelzer ABSTRACT This chapter presents two studies that examine the link between corporate culture and effectiveness in a variety of national settings. The first study compares results from 230 organizations from Europe, North America and Asia and reveals a surprising level of similarity in results across these regions. The second study presents the results from targeted samples of 218 supermarkets from Canada, Australia, Brazil, the U.S., Japan, Jamaica, and South Africa. These results show a common pattern in five of the countries, and a divergent pattern of findings in Jamaica and Japan. The results suggest that it is quite possible to measure and compare the cultural traits of organizations and their impact on business performance across nations, and to find empirical support for a general framework. But how can these findings be reconciled with the vast literature on cross-cultural differences? Discussion of this point reaches an interesting conclusion: Perhaps there is a common set of cultural traits that can be used to understand the effectiveness of organizations, but that are expressed quite differently in different national settings. Advances in Global Leadership Advances in Global Leadership, Volume 3, 205–227 © 2003 Published by Elsevier Science Ltd. ISSN: 1535-1203/PII: S1535120302030113
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DANIEL R. DENISON, STEPHANIE HAALAND AND PAULO GOELZER
INTRODUCTION One of the most difficult challenges in the field of international management is the application of theories and models developed in one part of the world in order to understand phenomena that occur in another part of the world. Much of the early concern about this issue concentrated on the relevance of American theories abroad (Hofstede, 1980a). But more recently, the same problem has been faced in Japanese theories of quality control (Imai, 1986) or knowledge creation (Nonaka & Takeuchi, 1995), or by European theories of joint ventures or organizational design (Doz, 1986; Taylor, 1991). The goal of these efforts is to develop a useful general frame of reference, but also allow for the sensitivity to local variation that is required when applied in context. Some of the biggest challenges for developing theories with cross-cultural relevance occur in the area of organizational studies. Differences in behavior, work values and culture have been studied by researchers in many different countries. Several frameworks have proven useful for understanding cultural differences (Hofstede, 1980b; Trompenaars, 1994, 1998), and have helped to establish some relatively universal dimensions (e.g. individualism) that can be useful in understanding differences across national cultures. But few researchers have attempted to understand the impacts that these behavioral differences have in different national contexts. The logic of cross-cultural comparison and validation has been discussed at length by several authors (Adler, 1991; Boyacigiller & Adler, 1991). But in most areas of the literature, the biggest challenge is the almost total absence of comparative data. Our literature review found very few studies that offered a comparison of the effectiveness of organizations across several countries that could be linked to differences in organizational culture, work values and behavior. The evidence that global leaders need to understand the impact of the organizational cultures they are creating is usually unavailable. This chapter takes a bold, but risky approach to these challenges by examining the link between organizational culture and effectiveness with two separate studies. The first study examines this link with data from 230 organizations from Europe, North America and Asia, and reveals a surprising level of similarity in the results across these regions. The second study examines the same topic using data from 218 organizations from seven countries: Canada, Australia, Brazil, the U.S., Japan, Jamaica, and South Africa. This study focuses on samples of supermarkets that were part of an independent cooperative operating in a similar fashion in each country. The results show a high level of similarity in five of the countries, but a divergent pattern of findings from Japan and Jamaica. These two studies constitute a preliminary and exploratory step, rather than a comprehensive study, but they
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do illustrate that a general theory about organizational culture can be applied in multiple contexts, with results that highlight both similarities and differences across regions. This chapter begins by describing a model of organizational culture used in this study and discusses some of the research, conducted primarily in the U.S., which has established a link between culture and effectiveness. We then pose several general research questions that guided our study. After that, we describe our samples, the data collection and analysis strategies, and report our results for both of the studies. Our discussion at the end of this chapter summarizes our findings, reflects upon their implications for cross-national research, and then considers some of the approaches that might facilitate future research in this area.
CORPORATE CULTURE AND ORGANIZATIONAL EFFECTIVENESS A number of scholars have developed integrative frameworks of organizational culture (Allaire & Firsirotu, 1984; Hatch, 1993; Martin, 1992; Ott, 1989; Schein, 1985, 1990), but little consensus exists with regard to a general theory. Since culture is a complex phenomenon ranging from underlying beliefs and assumptions to visible structures and practices, healthy skepticism also exists as to whether organizational culture can actually be “measured” in a comparative sense. Research on the link between organizational culture and effectiveness is also limited by lack of agreement about the appropriate measures of effectiveness. Despite these challenges, better understanding of this topic remains critical to the development of organizational studies. The current literature has its roots in the early 1980s. Deal and Kennedy (1982) and Peters and Waterman (1982) focused attention on the strategic importance of organizational culture and stimulated interest in the topic. Kotter and Haskett (1992) expanded on this by exploring the importance of adaptability and the “fit” between an organization and its environment. This chapter applies the culture framework developed by Denison and his colleagues (Denison, 1984, 1990, 1996; Denison & Mishra, 1995, 1998; Denison & Neale, 1996; Denison, Cho & Young, 2000; Denison, Haaland & Neale, 2002; Fey & Denison, in press). This stream of research has developed an explicit model of organizational culture and effectiveness and a validated method of measurement. Using data from 764 organizations, Denison and Mishra (1995) showed that the four different cultural traits – mission, consistency, adaptability and involvement – were related to different criteria of effectiveness. This research found that the traits of mission and consistency were the best predictors of profitability, the traits of involvement and adaptability the
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best predictors of innovation, and the traits of adaptability and mission the best predictors of sales growth. Denison, Haaland and Neale (2002) have linked the elements of the model to differences in customer satisfaction in two industries, and Fey and Denison (in press) have presented an application of this model to foreign-owned firms operating in Russia. The Denison model is based on four cultural traits of effective organizations that are described below with references to the organizational studies literature. A more complete review of these traits is provided by Denison and Mishra (1995). Involvement. Effective organizations empower their people, build their organizations around teams, and develop human capability at all levels (Becker, 1964; Lawler, 1996; Likert, 1961). Executives, managers and employees are committed to their work and feel that they own a piece of the organization. People at all levels feel that they have at least some input into decisions that will affect their work and that their work is directly connected to the goals of the organization (Katzenberg, 1993; Spreitzer, 1995). Consistency. Organizations also tend to be effective because they have “strong” cultures that are highly consistent, well-coordinated, and well-integrated (Davenport, 1993; Saffold, 1988). Behavior is rooted in a set of core values, and leaders and followers are skilled at reaching agreement even when there are diverse points of view (Block, 1991). This type of consistency is a powerful source of stability and internal integration that results from a common mindset and a high degree of conformity (Senge, 1990). Adaptability. Ironically, organizations that are well-integrated are often the most difficult ones to change (Kanter, 1983). Internal integration and external adaptation can often be at odds. Adaptable organizations are driven by their customers, take risks and learn from their mistakes, and have capability and experience at creating change (Nadler, 1998; Senge, 1990). They are continuously changing the system so that they are improving the organizations’ collective abilities to provide value for their customers (Stalk, 1988). Mission. Successful organizations have a clear sense of purpose and direction that defines organizational goals and strategic objectives, and expresses a vision of how the organization will look in the future (Hamel & Prahalad, 1994; Mintzberg, 1987, 1994; Ohmae, 1982). When an organization’s underlying mission changes, changes also occur in other aspects of the organization’s culture. Like many contemporary models of leadership and organizational effectiveness, this model focuses on the contradictions that occur as organizations try to achieve internal integration and external adaptation (Hatch, 1993; Schein, 1990). For example, organizations that are market-focused and opportunistic often have
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problems with internal integration. On the other hand, organizations that are well-integrated and over-controlled usually have a hard time adapting to their environment. Organizations with a top-down vision often find it difficult to focus on the empowerment and the “bottom-up” dynamics needed to implement that vision. At the same time, organizations with strong participation often have difficulty establishing direction. Effective organizations are those that are able to resolve these contradictions without relying on simple trade-offs. At the core of this model are underlying beliefs and assumptions. These “deeper” levels of organizational culture are typically quite unique to each firm, and are difficult to measure and harder to generalize about. They are often best understood from a qualitative perspective. Nonetheless, they provide the foundation from which behavior and action spring (Schein, 1985). The four traits of organizational culture presented by Denison and Mishra (1995) have been expanded by Denison and Neale (1996), and Denison, Cho and Young (2000) to include three subdimensions for each trait for a total of 12 dimensions. This version of the model is presented in Fig. 1.
Fig. 1. The Denison Organizational Culture Model.
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This model is often used as part of a diagnostic process to profile specific organizations in order to highlight the strengths and weaknesses of their cultures, and to suggest ways in which the organization’s culture may influence its effectiveness. The following example helps illustrate the application of the model.
Example of a Manufacturing Company in Decline This one-hundred-year-old manufacturing company has dominated its industry for many years, but it now faces a new type of competition that seriously undercuts its products on price. After years of success, the business has been declining for the past five years, and this past year was the first time that senior executives did not receive bonuses. The profile for the top management team of this organization is presented in Fig. 2. The data for this profile came from a survey of the top 50 people in the organization (Denison & Neale, 1996). Each index is measured by five survey items, using a five-point Likert scale, which are averaged to produce an index score. The results are presented in terms of percentile scores, indicating the
Fig. 2. Profile of a Manufacturing Company in Decline.
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percentage of organizations in the benchmark database of over 700 organizations (Haaland, 2002) that scored lower than the organization profiled. Examination of the culture profile of the management team reveals some key organizational problems: all of the measures of adaptability are poor; learning and creating change fall in the first quartile; and customer focus falls in the second quartile. The only strength in the area of mission is the operational focus on goals and objectives, indicating that there is little long-term vision or strategy. Involvement is also low, showing strengths only in the area of team orientation. The only real strength that appears in this profile is in the area of consistency, with a top quartile score in core values. When the top management team looked at this profile, there was a long silence. “What does this profile tell you about your organization?” the consultant asked. After a long silence, one of them replied, “Yeah, we’re a team alright – but we’re going down together.” “Yeah, that’s us,” said another. The core values that held the group together were wellsuited to the organization’s past, but not necessarily to their future. The management team also quickly linked other aspects of the profile to their situation – the emphasis on operational issues in the mission area reflected the President’s “mail room to board room” career path and the relative neglect of longer-term strategic issues. They had created many “teams” in the organization, but these teams had little impact on the way that work was actually done. Looking at this culture profile brought together a number of different symptoms of the organization’s decline and linked them to the behavior of the top management team. Their tendency to ignore the customer and the competitive environment and reason from the “inside-out” – taking the internal logic of their organization as a given and wondering why no one brought their products anymore – also came through strongly in this analysis. Since prior research has shown that internally-focused companies have lower growth rates (Denison & Mishra, 1995; Denison, Haaland & Neale, 2002), the analysis also made them more aware that they were unlikely to solve some of their most basic problems without a change in the behaviors and skills of their leaders. This survey has been translated into 14 languages and used in over 30 countries. A number of studies have examined the empirical link between culture and effectiveness in North America, but very few have attempted to examine this link across cultures.
RESEARCH QUESTIONS This study explores one basic research question: Are there cross-cultural differences in the relationship between organizational culture and effectiveness? This
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general research question has many facets, but in this chapter, we focus on whether the pattern identified in the original research in North America is similar to the patterns in other parts of the world, and whether there are distinctive patterns that are unique to specific countries. This question also requires us to see if the culture data itself varies significantly across different regions of the world. A final question concerns the explanation for the pattern of findings – Which factors account for the observed differences or similarities? These are the general research questions that guided the research presented in this chapter.
METHODS The sample for the first study reported in this chapter was drawn from the archive of organizations that have completed the Denison Organizational Culture Survey over the past five years. The sample included 36,820 individuals from 230 organizations drawn from different industries, and including organizations of all sizes and stages of growth. In order to be included in this study, firms had to have at least 25 respondents from a representative population of employees in the firm. On average, the response rate for each of these organizations was around 60%, with internal samples that varied from management teams to a complete census of the organization. The majority of companies in this sample were based in North America (n = 188). Eight of the companies are based in Asia and 34 are from Europe-Middle East-Africa (EMEA). Global companies headquartered in all regions typically have many respondents from outside of the region. Of the companies in this sample, 48% were listed in the Forbes Global 1,000 List for 2001. Approximately 20% are from the consumer cyclical industry including automotive sales and dealerships, home building companies, publishing, and retail. Another 13% of the companies in this sample come from the consumer staples industry including restaurants, beverage manufacturers, personal care products, food, and tobacco sectors. Companies in the technology sector account for 13% of the companies in this sample, and the health care sector, basic materials sector, and financials sector each account for 11% of the sample. Seven percent of the companies come from the capital goods sector, 3% each from the utilities sector and the communications sector, and 1% from the transportation sector. The remaining 7% come from public or non-profit organizations such as schools and government agencies. The sample for the second study reported in this chapter included 2,162 employees of independently-owned local grocery stores within seven countries. The number of participants and stores per country are as follows: 749 respondents from 92 stores in Australia, 326 respondents from 17 stores in Brazil, 197
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respondents from 13 stores in Canada, 306 respondents from 18 stores in Jamaica, 96 respondents from 20 stores in Japan, 185 respondents from 20 stores in South Africa, and 255 respondents from 38 stores in the United States. All respondents were full-time employees with positions ranging from non-management to management to store owner. In total, 6,736 surveys were mailed out worldwide. Total response rate was 42%, but 658 of these surveys could not be used because they didn’t complete enough questions, or could not be linked back to the appropriate store. This resulted in a usable response rate of 32%. The stores participating in this study are part of the International Grocers Alliance (IGA). IGA, headquartered in Chicago, IL, was founded in 1926 and today is a global alliance of more than 4,000 licensed stores, with aggregate annual sales of $21 billion. IGA currently has operations in 40 countries, commonwealths and territories. Retailers who choose to join IGA, a voluntary non-profit supermarket network, acquire the size and strength to compete in the marketplace while maintaining their flexibility and autonomy as small business operators. IGA is owned by a set of wholesalers and retailers. The system is made up of supermarkets affiliated with IGA wholesalers and distributors in each country. There are two types of affiliation that supermarkets may have with IGA: (1) as a corporate store, where the wholesaler is the owner of the store; or (2) through a “sponsorship,” where the owner-operator joins the IGA system as a licensed store. Countries selected to participate in this study contained a minimum of 15 IGA affiliated stores. All stores in Brazil and Jamaica were surveyed because a smaller number of total stores exist in these two countries. In Canada, Australia and South Africa supermarkets were randomly selected to participate in the study. In the United States and Japan surveys were sent directly to a sample of high- and low-performing stores. The U.S. sample was chosen from a balanced sample of stores with high and low ratings on an annual store assessment processed by an independent third party inspector. In Japan, an independent “retail counselor” identified high and low performing stores. Stores in Japan were surveyed in Japanese, and stores in Brazil were surveyed in Portuguese. All other stores were surveyed in English. The survey items for this study were taken from The Denison Organizational Culture Survey (Denison & Neale, 1996). This survey measures twelve indices of organizational culture using five questions each for a total of 60 questions. All items used a five-point Likert scale with response categories ranging from strongly disagree to strongly agree. These twelve indices are used to measure the four main cultural traits defined by the model – involvement, consistency, adaptability, and mission. The survey also assesses employees’ perceptions of store performance on variables including sales growth, profitability, quality of products and services,
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employee satisfaction, and overall organizational performance. All measures were aggregated to the organizational level for this analysis. A complete listing of all items used in this study is included in the Appendix.
RESULTS The results from both studies are reported in the same way. First, we report the simple correlations between the twelve indexes of organizational culture and the subjective ratings of overall effectiveness. Next, we report a series of one-way ANOVAs to understand the significant differences in scores from each of the countries and regions. Study One The correlations between the twelve culture indices and overall subjective performance for the three regions, North America, Asia, and Europe-Mid-East-Africa (EMEA), are presented in Table 1. All correlations between overall performance and culture indices were significant for North America (mean r = 0.60) and EMEA (mean r = 0.64). None of the correlations were significant for the Asian companies, although the size of the correlations are almost identical (mean r = 0.62). Similar results were also found for four other subjective indicators of performance; sales growth, profitability, quality, and employee satisfaction. These results are not presented here, but are readily available upon request. Table 1. Correlation between Culture and Overall Effectiveness by Region. North America Empowerment Team Orientation Capability Development Core Values Agreement Coordination & Integration Creating Change Customer Focus Organizational Learning Strategic Direction & Intent Goals & Objectives Vision Number of Organizations
0.65∗
0.61∗
0.70∗ 0.61∗ 0.58∗ 0.69∗ 0.48∗ 0.36∗ 0.50∗ 0.55∗ 0.60∗ 0.53∗ 169
Asia
EMEA
0.57 0.71 0.48 0.65 0.62 0.62 0.87 0.19 0.82 0.66 0.54 0.71 7
0.60∗ 0.53∗ 0.50∗ 0.69∗ 0.73∗ 0.74∗ 0.68∗ 0.62∗ 0.52∗ 0.79∗ 0.62∗ 0.67∗ 34
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Table 2. ANOVA of Differences in Culture Scores Across Countries. North America
Asia
ANOVA of Differences in Adaptability ∗∗ North America Asia −0.003 EMEA −0.001
∗∗
ANOVA of Differences in Mission ∗∗ North America Asia −0.008 EMEA −0.003
∗∗
ANOVA of Differences in Involvement ∗∗ North America Asia 0.001 EMEA −0.003
∗∗
0.002
0.005
0.002
ANOVA of Differences in Consistency ∗∗ North America Asia 0.007 EMEA 0.002
EMEA
∗∗
∗∗
∗∗
∗∗
−0.005
∗∗
The one-way ANOVAs assessing the significance of mean differences on the culture scores between the three regions, North America, Asia and Europe-MidEast-Africa, are presented in Table 2. Interestingly enough, the three regions did not differ significantly from each other in any of the four organizational culture traits measured in this study. Mean differences of less than 0.08 were noted for the involvement, consistency, adaptability, and mission traits across all three geographic regions. The largest differences were noted between EMEA and Asia in all four traits. Asian companies gave slightly lower ratings than did EMEA companies on the traits of involvement and consistency, but EMEA organizations gave slightly lower ratings than Asian organizations on adaptability and mission. Overall, however, these differences are very small. Study Two The correlations between the twelve cultural indices and the subjective overall performance ratings for each country are presented in Table 3. All twelve culture indices were significantly correlated with overall performance ratings in Australia (mean r = 0.33), the United States (mean r = 0.60), and Brazil (mean r = 0.79). All indices except organizational learning were significantly correlated with overall performance ratings in South Africa. In Canada, however, only strategic
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Table 3. Correlation between Overall Performance and the 12 Indices by Country. South Africa Empowerment Team Orientation Capability Development Core Values Agreement Coordination & Integration Creating Change Customer Focus Organizational Learning Strategic Direction & Intent Goals & Objectives Vision Number of Stores
Canada
∗
0.60 0.61∗ 0.70∗ 0.54∗ 0.63∗ 0.54∗ 0.82∗ 0.45∗ 0.12 0.69∗ 0.76∗ 0.45∗ 20
Jamaica
0.38 0.43 –0.06 0.34 0.37 0.45 0.34 0.06 0.13 0.77∗ 0.58∗ 0.43 13
0.08 –0.06 0.26 0.34 0.20 0.18 0.00 0.25 0.11 0.44 0.22 0.26 18
Australia ∗
0.27 0.32∗ 0.23∗ 0.39∗ 0.34∗ 0.37∗ 0.35∗ 0.24∗ 0.33∗ 0.38∗ 0.42∗ 0.36∗ 92
United States ∗
0.68 0.60∗ 0.56∗ 0.63∗ 0.54∗ 0.56∗ 0.63∗ 0.45∗ 0.67∗ 0.57∗ 0.68∗ 0.61∗ 38
Brazil ∗
0.84 0.86∗ 0.81∗ 0.83∗ 0.78∗ 0.88∗ 0.75∗ 0.62∗ 0.76∗ 0.79∗ 0.81∗ 0.79∗ 17
Japan 0.08 0.11 0.14 0.47∗ 0.28 0.23 0.23 0.24 –0.10 0.55∗ 0.25 0.29 20
direction and intent (r = 0.77) and goals and objectives (r = 0.58) were significantly correlated with overall performance ratings. For Japanese stores, only core values (r = 0.47) and strategic direction and intent (r = 0.55) were significantly correlated with overall performance. Finally, no significant correlations between culture indices and overall performance ratings emerged for Jamaica (mean r = 0.19). Next, one-way ANOVAs were performed to assess mean differences in organizational culture ratings across countries. Table 4 shows the results for the involvement trait. South Africa significantly differed only from the United States. On average, stores in the United States rated involvement indices 0.293 points lower than did their South African counterparts. Canadian stores significantly differed from stores in the United States and Japan. Canadians rated involvement indices 0.35 to 0.40 scale points higher than Japan and the U.S. Jamaican stores also significantly differed from stores in the U.S. and Japan. Jamaicans rated the involvement indices 0.44 to 0.50 scale points higher than did stores in the U.S. and Japan. Australian Table 4. ANOVA of Differences in Involvement Scores Across Countries. South Africa South Africa Canada Jamaica Australia United States Brazil Japan
Canada
Jamaica
Australia
United States
Brazil
Japan
∗∗
−0.102 −0.187 −0.206 0.293∗ 0.010 0.250
∗∗
−0.008 −0.104 0.400∗ 0.198 0.352∗
∗∗
−0.002 0.480∗ 0.282 0.437∗
∗∗
0.500∗ 0.301∗ 0.456∗
∗∗
−0.198 −0.004
∗∗
0.155
∗∗
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Table 5. ANOVA of Differences in Consistency Scores Across Countries. South Africa South Africa Canada Jamaica Australia United States Brazil Japan
Canada
Jamaica
Australia
United States
Brazil
Japan
∗∗
−0.007 −0.130 −0.176 0.009 0.003 0.347∗
∗∗
−0.006 −0.103 0.160 0.101 0.419∗
∗∗
−0.005 0.218∗ 0.158 0.477∗
∗∗
0.263∗ 0.204∗ 0.523∗
∗∗
0.006 0.259∗
∗∗
0.319∗
∗∗
stores significantly differed from stores in the U.S., Brazil and Japan, with mean differences resulting in Australians rating involvement indices 0.50, 0.30 and 0.46 points higher than U.S., Brazilian and Japanese stores, respectively. As previously noted the U.S. stores rated involvement indices significantly lower than South African, Canadian, Jamaican and Australian stores. Japanese stores rated involvement indices significantly lower than Canadian, Jamaican and Australian stores. Brazilian stores only differed significantly from Australian scores. Japanese stores rated the consistency trait significantly lower than did all other stores. These results are presented in Table 5. South African and Canadian stores were not significantly different than any other country besides Japan. Jamaica gave significantly higher mean ratings to consistency than did the U.S. and Japanese stores. Australian stores rated consistency significantly higher than did U.S., Brazilian and Japanese stores. As previously noted, the U.S. rated consistency significantly lower than did Australian and Jamaican stores, but rated consistency significantly higher than did Japanese stores. ANOVAs for Adaptability are shown in Table 6. For the adaptability trait, there were no significant differences in mean ratings noted between Canadian stores and any other country. Japanese stores gave significantly lower adaptability ratings than did any other country with the exception of the U.S. and Canada. South African, Table 6. ANOVA of Differences in Adaptability Scores Across Countries. South Africa South Africa Canada Jamaica Australia United States Brazil Japan
Canada
Jamaica
Australia
United States
Brazil
Japan
∗∗
0.008 −0.008 −0.003 0.201∗ −0.002 0.314∗
∗∗
−0.157 −0.107 0.124 −0.010 0.236
∗∗
0.005 0.281∗ 0.006 0.393∗
∗∗
0.231∗ 0.001 0.343∗
∗∗
0.219∗ 0.113
∗∗
0.332∗
∗∗
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DANIEL R. DENISON, STEPHANIE HAALAND AND PAULO GOELZER
Table 7. ANOVA of Differences in Mission Scores Across Countries. South Africa South Africa Canada Jamaica Australia United States Brazil Japan
Canada
Jamaica
Australia
United States
Brazil
Japan
∗∗
−0.001 −0.226 −0.006 0.187 −0.007 0.361∗
∗∗
−0.214 −0.005 0.199 −0.006 0.373∗
∗∗
0.166 0.413∗ 0.154 0.587∗
∗∗
0.247∗ −0.001 0.421∗
∗∗
−0.259∗ 0.174
∗∗
0.433∗
∗∗
Jamaican, Australian and Brazilian stores rated adaptability significantly higher than did U.S. and Japanese stores, but did not differ from each other. The final culture trait, mission, again showed Japanese stores giving significantly lower ratings than all other countries except the U.S. These results are presented in Table 7. South African and Canadian stores did not differ significantly from any other countries besides Japan. Jamaican, Australian, and Brazilian stores again gave significantly higher ratings to mission than did the U.S. and Japanese stores. Overall, the correlations presented here show a strong and consistent pattern in Brazil, South Africa and the U.S. Australia and Canada show a similar, but somewhat weaker pattern. Canada’s small sample may have contributed to these results. In Japan and Jamaica, however, the pattern is quite different. In Jamaica, the correlations between culture and effectiveness measures are generally very low. In Japan, a few correlations are quite strong, but the pattern is mixed. The difference of means tests also highlighted several interesting patterns. First, the results show that Jamaica has a much weaker pattern of correlations between the culture and effectiveness measures, but that the overall level of culture scores is very similar to Canada, South Africa, Australia, and Brazil. Second, the differences in means tests consistently show significantly lower scores for both the U.S. and Japan. Before considering a substantive explanation for these differences, however, it is important to point out the difference in sampling procedures used within these two countries. As noted earlier, both Japan and the U.S. used sampling procedures designed to contrast high and low performing stores. This sampling procedure may have resulted in lower performing stores, which presumably also had lower culture scores, being over-represented.
DISCUSSION The two studies reported in this chapter make a modest empirical contribution to understanding one of the fundamental challenges of leadership in a global
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environment. The first study presents a summary of a large empirical database on organizational culture and effectiveness. Despite everything that we know about the importance of cross-cultural differences, these results show a very similar pattern across these major regions of the world. The link between company culture and effectiveness, at least as it is measured in this study, appears to be both strong and consistent. In addition, the mean scores for the culture measures are essentially the same for the samples of organizations in each of these three regions. How can this be? Almost every article and discussion on the topic focuses on the importance of cultural differences. Yet, in one of the few comparative examinations of the issue, we see almost no difference. After scratching our heads for a while, we offer several explanations for this unexpected outcome. First, the purpose of the model used for in study was to help understand the impact that organizational culture has on organizational effectiveness. Thus, the purpose of the concepts is to build an organizational-level model that elaborates the cultural factors that help distinguish effective and ineffective organizations. This content is designed to be general enough to apply to a wide range of organizations and to predict one narrow, but important outcome. The intent of the model is quite different from those that are specifically designed to describe the differences that exist between national cultures. Another factor that should be considered in explaining these “no difference” results may be the fact that respondents tend to “self-norm,” by comparing their own situation to other organizations in their same country or region. This “self-norming” process reminds us that survey data are always the result of making judgments relative to expectations. When expectations are rooted in a particular national context, that may indeed limit the differences that appear across cultures. Even though these results provide good support for the usefulness of these organizational traits and measures for predicting the effectiveness of firms in different national contexts, we would not argue that this means that these traits are expressed in the same way in each of these contexts, or that the same meaning would be attached to the same behaviors in different national contexts. On the contrary, we would take these results to mean that a concept like empowerment is important around the world, but we would not argue that this means that the same behaviors would necessarily constitute empowerment in different national contexts. Thus, the model probably says much more about the presence of a desirable set of traits than it does about how those traits are expressed. Examples help to illustrate this dilemma for all of the concepts in the model. But some of the most vivid examples concern the expression of involvement and empowerment in high power distance countries. One career ex-patriot Citibank
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executive told this story about taking a new job in Riyadh to help revitalize a Saudi-Pakistani joint venture bank: Each day, when I went in, everyone that was working in the area outside my office would stand up and salute. The first day I was honored, but it soon became annoying. One day, I left something in my car and had to go back out to get it, and then come back in. Each time they stood up and saluted! Up, down, up, down – how were we supposed to get anything done? When I told them not to stand up and salute when I came in, they obeyed, but I had hurt their feelings. They saw this as conveying respect, not subservience, and were a bit insulted that their attempt to honor me had been rebuffed. It took me some time to recover. My admonition that we were “all working together as a team” was confusing to them – I was moving too far too fast. Only then did I understand the true challenge that I faced.
Expressing regard for cultural diversity itself can also vary across cultures. A Dutchman who ran HP Tech Support call centers in Amsterdam that operated in 38 languages contributed this story about visiting corporate headquarters: When I first went to work in California, I would describe the way that we worked in Amsterdam, by saying things like, “well the Italians did it this way and the Germans did it that way and the French did it their own way – what a mess,” and then we would laugh and sort things out. But before long, one of the American managers pulled me aside and said, “Stop saying that – it is offensive to all of us.” I was really confused until I realized that Europeans naturally explain everything in terms of nationality, whereas Americans rarely speak directly about national differences at work.
There are several limitations in both of these studies that should also be considered. In the first study, there is a very limited sample from Asia. The small sample that is available shows the same pattern of results as the larger sample, but statistical significance is very low, and thus our confidence in these findings is compromised. As this database continues to grow, we will be able to redo this analysis to confirm that this preliminary summary is not misleading. The first study also relied on large regional categories that could mask distinct variations within each of these regions. In a separate analysis, we did compare results from several EU countries that had samples of 15 to 20 firms, and saw similar results to those reported in this study. Once again, as this database grows, it will be possible to make these comparisons in greater detail. One final limitation of this first study concerns the wide range of organizations and sampling schemes employed within the organizations. Clearly, the results would be more representative if they were controlled for size, industry, level of respondents, and size of the internal sample. Other research on this database has shown that these differences are relatively small compared to the large differences that exist between organizations, but these findings would still be strengthened with a study design that allowed for these factors to be controlled. There are also a number of limitations to the second study. Our original intent in the second study was to examine a similar set of organizations across different
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national contexts, so that the type of organization could be held constant. This feature of having multiple units of the same (or similar) organizations available for comparison offers a number of advantages. Although the benchmark research by Hofstede (1980b) is often criticized because of its reliance on one organization, IBM, as the sole source of data, we would argue that this is also a key strength of the study. To a degree, it allows for an “apples to apples” comparison across nations. While this may be a poor choice of metaphor to use in a study of supermarkets (!), comparing similar organizations is at some point essential to identifying differences and similarities across nations. Reliance on one MNC of one nationality may “attenuate” the influence of national culture, but it also offers a relatively constant point of reference. The biggest limitation of the second study is that the country specific samples were influenced by choices made in each country. This has resulted in “high/low” samples of organizations in two of the countries, Japan and the U.S., with random samples or a complete census in the other five countries. Adding in a specific sample of low-performing organizations appears to have had a strong influence on the difference of means tests, and somewhat less of an influence on the correlational analysis. When the findings from the two studies are compared, the low results for the U.S. in Study Two are clearly not reflected in Study One. The correlations, however, are much more comparable between the two studies. Indeed, since most of the firms in the Asia sample in Study One are from Japan (five of eight), it also seems like the difference of means tests in Study Two may be influenced by the sampling procedure. In this case, however, the correlations in Study One and Study Two for Japan and Asia are still contradictory. Considering the results from these two studies helps to identify future targets for research. A focus on industries such as retail or hospitality that have comparable operating units in many locations, and have comparable measures of their performance, would offer several advantages. This would offer a point of reference for understanding differences between countries and would offer a way to move beyond the subjective measures of effectiveness used in the studies reported in this chapter. Choosing several MNCs with different national origins, but a common presence in different national contexts, would also provide an important point of comparison. For global leaders, these studies provide an interesting point of reference for the choices they make about building their organizations and cultures. The findings suggest that a common perspective on organizational culture may indeed be possible in multinational corporations. Furthermore, these characteristics can be measured and tracked and appear to have a somewhat predictable impact on effectiveness. Nonetheless, the discussion of these results also emphasizes that
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the way in which these traits are expressed varies greatly across national cultures. This additional complexity paints a clear, yet challenging picture of the challenges that face a global leader: Attempting to create a common set of organizational traits that are expressed in different ways in different national contexts.
ACKNOWLEDGMENTS The authors would like to thank the International Institute for Management Development for their support of this research. In addition, we are grateful for the involvement of all the managers and executives who participated in this study, as well as the helpful comments of the editors.
REFERENCES Adler, N. J. (1991). International dimensions of organizational behavior (2nd ed.). Boston, MA: Kent Publishing. Allaire, Y., & Firsirotu, M. (1984). Theories of organizational culture. Organization Studies, 5, 193– 226. Becker, G. (1964). Human capital: A theoretical and empirical analysis with special reference to education. New York, NY: Columbia University Press. Block, P. (1991). The empowered manager: Positive political skills at work. San Francisco, CA: JosseyBass. Boyacigiller, N., & Adler, N. (1991). The parochial dinosaur: Organizational science in a global context. Academy of Management Review, 16(2), 262–291. Davenport, T. (1993). Process innovation: Re-engineering work through information technology. Boston, MA: Harvard Business School Press. Deal, T. E., & Kennedy, A. A. (1982). Corporate cultures: The rites and rituals of corporate life. Reading, MA: Addison-Wesley Publishing Co. Denison, D. R. (1984). Bringing corporate culture to the bottom line. Organizational Dynamics, 13(2), 4–22. Denison, D. R. (1990). Corporate culture and organizational effectiveness. New York, NY: Wiley. Denison, D. R. (1996). What IS the difference between organizational culture and organizational climate? A native’s point of view on a decade of paradigm wars. Academy of Management Review, 21(3), 619–654. Denison, D. R., Cho, H. J., & Young, J. (2000). Diagnosing organizational culture: Validating a model and method. Working Paper, International Institute for Management Development, Lausanne, Switzerland. Denison, D. R., & Mishra, A. K. (1995). Toward a theory of organizational culture and effectiveness. Organization Science, 6(2), 204–223. Denison, D. R., & Mishra, A. K. (1998). Does organizational culture have an impact on quality? A study of culture and quality in ninety-two manufacturing organizations. Presentation to the Academy of Management Convention, San Diego, CA., August 1998.
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Denison, D. R., & Neale, W. S. (1996). Denison organizational culture survey. Ann Arbor, MI: Aviat. Denison, D. R., Haaland, S., & Neale, W. S. (2002). Linking corporate culture and customer satisfaction: Two empirical studies. Presented at the 17th Annual Society of Industrial/Organizational Psychologists Conference: Toronto, ON. Doz, Y. (1986). Strategic management in multinational companies. New York, NY: ButterworthHeinemann. Fey, C., & Denison, D. (in press). Organizational culture and effectiveness: Can an American theory be applied in Russia? Working Paper, International Institute for Management Development, Lausanne, Switzerland. Haaland, S. (2002). Denison organizational culture survey: Description of norms. Ann Arbor, MI: Denison Consulting. Hamel, G., & Prahalad, C. K. (1994). Competing for the future. Boston, MA: Harvard Business School Press. Hatch, M. J. (1993). The dynamics of organizational culture. Academy of Management Review, 18(4), 657–693. Hofstede, G. (1980a). Motivation, leadership, and organization: Do American theories apply abroad? Organizational Dynamics, 9(1), 42–58. Hofstede, G. (1980b). Culture’s consequences. Newbury Park, CA: Sage. Imai, M. (1986). Kaizen: The key to Japan’s competitive success. New York, NY: McGraw-Hill. Kanter, R. (1983). The change masters: Innovation for productivity in the American corporation. New York, NY: Simon and Schuster. Kotter, J. P., & Haskett, J. L. (1992). Corporate culture and performance. New York, NY: Free Press. Lawler, E. E., III. (1996). From the ground up: Six principles for building the new logic corporation. San Francisco, CA: Jossey-Bass. Likert, R. (1961). New patterns of management. New York, NY: McGraw-Hill. Martin, J. (1992). Cultures in organizations: Three perspectives. New York, NY: Oxford University Press. Mintzberg, H. (1987). Crafting strategy. Harvard Business Review, 65, 66–75. Mintzberg, H. (1994). The rise and fall of strategic planning: Reconciling for planning, plans, planners. New York, NY: Free Press. Nadler, D. (1998). Champions of change: How CEOs and their companies are mastering the skills of radical change. San Francisco, CA: Jossey-Bass. Nonaka, I., & Takeuchi, H. (1995). The knowledge creating company. London, UK: Oxford Press. Ohmae, K. (1982). The mind of the strategist: The art of Japanese business. New York, NY: McGrawHill. Ott, J. S. (1989). The organizational culture perspective. Chicago, IL: Dorsey Press. Peters, T. J., & Waterman, R. H. (1982). In search of excellence lessons from America’s best-run companies. New York, NY: Harper & Row. Saffold, G. (1988). Culture traits, strength, and organizational performance: Moving beyond “strong” culture. Academy of Management Review, 13(4), 546–558. Schein, E. (1985). Organizational culture and leadership. San Francisco, CA: Jossey-Bass. Schein, E. (1990). Organizational culture. American Psychologist, 45, 109–119. Senge, P. (1990). The fifth discipline: The art and practice of the learning organization. New York, NY: Doubleday/Currency. Spreitzer, G. (1995). Psychological empowerment in the workplace: Dimensions, measurement, and validation. Academy of Management Journal, 38, 1442–1465.
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Stalk, G. (1988). Competing against time: How time-based competition is reshaping global markets. New York, NY: Free Press. Taylor, W. (1991). The logic of global business: An interview with ABB’s Percy Barnevik. Harvard Business Review, 69(2), 90–106. Trompenaars, F. (1994). Riding the waves of culture: Understanding diversity in global business. New York, NY: Irwin. Trompenaars, F. (1998). Riding the waves of culture: Understanding cultural diversity in global business (2nd ed.). New York, NY: Irwin.
APPENDIX A ITEMS AND INDEXES FOR EACH TRAIT Index
Scale
Involvement
Empowerment
Consistency
Item 1. Most employees are highly involved in their work. 2. Decisions are usually made at the level where the best information is available. 3. Information is widely shared so that everyone can get the information he or she needs when it’s needed. 4. Everyone believes that he or she can have a positive impact. 5. Business planning is ongoing and involves everyone in the process to some degree.
Team Orientation
6. Cooperation across different parts of the organization is actively encouraged. 7. People work like they are part of a team. 8. Teamwork is used to get work done, rather than hierarchy. 9. Teams are our primary building blocks. 10. Work is organized so that each person can see the relationship between his or her job and the goals of the organization.
Capability Development
11. Authority is delegated so that people can act on their own. 12. The “bench strength” (capability of people) is constantly improving. 13. There is continuous investment in the skills of employees. 14. The capabilities of people are viewed as an important source of competitive advantage. 15. Problems often arise because we do not have the skills necessary to do the job.*
Core Values
16. The leaders and managers “practice what they preach.” 17. There is a characteristic management style and a distinct set of management practices.
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Appendix A. (Continued ) Index
Scale
Agreement
Adaptability
Item 18. There is a clear and consistent set of values that governs the way we do business. 19. Ignoring core values will get you in trouble. 20. There is an ethical code that guides our behavior and tells us right from wrong. 21. When disagreements occur, we work hard to achieve “win-win” solutions. 22. There is a “strong” culture. 23. It is easy to reach consensus, even on difficult issues. 24. We often have trouble reaching agreement on key issues.* 25. There is a clear agreement about the right way and the wrong way to do things.
Coordination and Integration
26. Our approach to doing business is very consistent and predictable. 27. People from different parts of the organization share a common perspective. 28. It is easy to coordinate projects across different parts of the organization. 29. Working with someone from another part of this organization is like working with someone from a different organization.* 30. There is good alignment of goals across levels.
Creating Change
31. The way things are done is very flexible and easy to change. 32. We respond well to competitors and other changes in the business environment. 33. New and improved ways to do work are continually adopted. 34. Attempts to create change usually meet with resistance.* 35. Different parts of the organization often cooperate to create change.
Customer Focus
36. Customer comments and recommendations often lead to changes. 37. Customer input directly influences our decisions. 38. All members have a deep understanding of customer wants and needs. 39. The interests of the customer often get ignored in our decisions.* 40. We encourage direct contact with customers by our people.
Organizational Learning
41. We view failure as an opportunity for learning and improvement.
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Appendix A. (Continued ) Index
Scale
Item 42. Innovation and risk-taking are encouraged and rewarded. 43. Lots of things “fall between the cracks.”* 44. Learning is an important objective in our day-to-day work. 45. We make certain that the “right hand knows what the left hand is doing.”
Mission
∗ Items
Strategic Direction & Intent
46. There is a long-term purpose and direction. 47. Our strategy leads other organizations to change the way they compete in the industry. 48. There is a clear mission that gives meaning and direction to our work. 49. There is a clear strategy for the future. 50. Our strategic direction is unclear to me.*
Goals & Objectives
51. There is widespread agreement about goals. 52. Leaders set goals that are ambitious, but realistic. 53. The leadership has “gone on record” about the objectives we are trying to meet. 54. We continuously track our progress against our stated goals. 55. People understand what needs to be done for us to succeed in the long run.
Vision
56. We have a shared vision of what the organization will be like in the future. 57. Leaders have a long-term viewpoint. 58. Short-term thinking often compromises our long-term vision.* 59. Our vision creates excitement and motivation for our employees. 60. We are able to meet short-term demands without compromising our long-term vision.
in italics are worded negatively in the survey. Responses are reversed for analytic purposes.
APPENDIX B EFFECTIVENESS QUESTIONS Comparing the performance of your organization with others in the industry, how would you assess your company performance in the following areas? Please mark one response per item.
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Sales Growth Profitability/ROI Quality of Products and Services Employee Satisfaction Overall Organizational Performance
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Don’t Know 0
Low Performer 1
Average 2
3
4
High Performer 5
0 0 0 0 0
1 1 1 1 1
2 2 2 2 2
3 3 3 3 3
4 4 4 4 4
5 5 5 5 5
INTRODUCTION William H. Mobley In the preceding two sections of this volume, we have examined some of the foundations of global leadership as well as cross-cultural perspectives. In this section we examine some of the processes, practices and developmental issues surrounding global leadership. As noted in the introduction to this volume, the placement of chapters in one of the three sections was somewhat arbitrary since all three sections are interrelated. The chapters in this section – by Elaine B. Sloan, Joy F. Hazucha and Paul T. Van Katwyk; John Hofmeister and Sarah Parker; and by Don D. Davis and Janet L. Bryant – could easily have been included in the Foundations section. The chapters by Joseph J. DiStefano and Martha L. Maznevski and by Linda E. Laddin could easily have been included in the Cross-Cultural Perspectives section. As we review these chapters, we will draw attention to the interrelationships with the other two sections. Sloan, Hazucha and Van Katwyk, among the leading thinkers at Personnel Decisions International (PDI, a global talent assessment and development firm), present a comprehensive integration of conceptual models and research to develop a guiding framework for strategically managing global leadership talent. Their framework addresses three important issues: clarifying global strategy, defining global leadership roles, and designing the talent management system. They draw on Bartlett and Ghoshal’s (1998) work on classifying global strategies, and on Boudreau, Ramstad and Dowling’s work (see e.g. Part I of this volume) in seeking to clarify strategy and to better understand the link between strategy and talent-planning and management. They also address the issues of competencies raised by Hollenbeck and McCall in Part I of this volume as well as issues of distance leadership (see Davis’s chapter in this section). They present a highly
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useful and integrated model for designing an organization’s talent management system. Hofmeister and Parker from Royal Dutch Shell tackle the universal challenge of effectively balancing the competing tensions of central and distributed power and authority in organizations. Practitioners and academics alike can identify with the complexity and high costs associated with the turf issues in the corporate center, and regional and local leaders’ inability to find an effective balance. In this superb chapter, Hofmeister and Parker lead us through an analysis of the centripetal and centrifugal forces that operate in an organization, the consequences of imbalance, and the “regulators of balance” that can help create sustained long-term shareholder and stakeholder value. These regulators of balance include theory, strategy, process, culture, metrics and rewards, accountability and performance management, a “both/and” mindset, co-ordinative functions, and people making it work. These authors forcefully and effectively document why leading organizations cannot be left to amateurs, no matter how talented technically or functionally, and offer valuable insights on how to develop and manage the needed balance. Davis and Bryant present an integration of the literature on influence at a distance in leading global leadership teams. Continuing the interest of this series in distance leadership (see e.g. the chapters by Kiely, 2001, and Eyring, 2001, in Volume 2 of this series), Davis and Bryant provide a roadmap of issues and approaches to more effectively leading teams at a distance. Most importantly, it is not about e-technology. It is very much about group dynamics, diversity, cross-cultural understanding, and active leadership. As noted by Sloan et al. in an earlier chapter in this volume, as globalization continues, the subject matter of leading at a distance will become even more important. It is almost an axiom to state that cross-cultural awareness is essential to effective global leadership. How does one learn this awareness? In the earlier chapters in this volume by Hollenbeck and McCall and Deal et al., it was argued that the lessons of experience are the best teacher. In this section, DiStefano and Maznevski from IMD, share with us how a leading global business school is creating carefully integrated learning experiences for MBAs and executives to further develop their cross-cultural awareness. One has to believe that if more MBA programs and executive development processes gave detailed attention to this subject manner in the way DiStefano and colleagues are doing, the development of global leadership would be enhanced. In the final chapter, Linda Laddin, an experienced international talent development professional, shares with us some of her personal insights on leadership development in Asia. Like Hofmeister and Parker, Hollenbeck and McCall (in this volume), and McCall and Hollenbeck (2002), among others, Laddin believes that too much is being left to amateurs, to misguided design or
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lack of design, and to chance. Organizations simply are not doing enough to provide effective leadership development experiences. Further, in a somewhat misguided attempt at standardization towards organizational conformity, corporate leadership development programs often miss the critical importance of cultural adaptability. She argues for more “indigenous design” as a way of creating or tailoring development processes to fit a host culture and norms, while maintaining the character of the global organization. Collectively, the chapters in this section contain a wealth of new ideas, models and specific pathways for improving the development and effectiveness of global leadership. It is also abundantly clear that much of what we already know is not being applied. Linking strategy and talent management; and putting in place the “regulators of balance,” more effective distance leadership, more effective crosscultural learning experiences and indigenous design of development processes are among the valuable insights offered by the authors in this section. One hopes that the chapters in this and earlier volumes, together with the growing literature on effective global leadership, will contribute to more effective leadership talent development and processes. As noted in the Chinese proverb in this volume’s introduction, we cannot stand still in the face of the global currents; to do so is to drift backwards.
REFERENCES Bartlett, C. A., & Ghoshal, S. (1998). Managing across borders. Boston, MA: Harvard Business School Press. Eyring, R. A. (2001). The challenges of long-distance leadership: A view from Asia. In: W. H. Mobley & M. W. McCall Jr. (Eds), Advances in Global Leadership (Vol. 2). Oxford, UK: JAI/Elsevier Science. Kiely, L. S. (2001). Overcoming time and distance: International virtual executive teams. In: W. H. Mobley & M. W. McCall Jr. (Eds), Advances in Global Leadership (Vol. 2). Oxford, UK: JAI/Elsevier Science. McCall, M. W., Jr., & Hollenbeck, G. (2002). Developing global executives: The lessons of international experience. Boston, MA: Harvard Business School Press.
STRATEGIC MANAGEMENT OF GLOBAL LEADERSHIP TALENT Elaine B. Sloan, Joy F. Hazucha and Paul T. Van Katwyk ABSTRACT Senior line managers and their HR business partners need to make sure they have the right leadership talent, at the right time, in the right place. Our aim in this chapter is to weave together some of the best conceptual models and most useful research findings we have found to create a guiding framework for managing global leadership talent strategically. The guiding framework addresses three primary phases of global talent planning and development: clarifying the globalization strategy, defining global leadership roles and requirements, and designing the talent management system.
INTRODUCTION The “global leadership gap” has become, and is likely to remain, one of the chief constraints on corporate growth and effectiveness in the 21st century. There is a current shortage of globally developed talent, and the competition for suitable candidates promises to become even keener. Low birth rates, resulting in an aging population in the so-called “developed” nations, leave fewer people in the workforce, while the poverty and lack of education in developing economies limits the number of successful applicants from those regions. Exacerbating the
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situation is the increasing speed and pressure of day-to-day concerns that deflects managerial attention away from long-term development. Yet, to achieve and sustain competitive advantage in today’s global economy, companies must excel at attracting, developing and deploying global leaders, and equipping them to manage the pivotal talent pools that will drive company success. If companies do not master the art of global talent management, institutionalizing these capabilities and continually renewing their leadership resources, they will not only lose ground, they will risk obliteration. Managing global organizations with diverse and dispersed global talent demands a capacity for broad vision and a range of capabilities that tests the very best leaders. Although this is familiar terrain for some, it is a new frontier for many; we believe all leaders would benefit from a compass and at least a crude map. In this chapter, we will attempt to weave together some of the best ideas and research findings we have found into a guiding framework or roadmap for managing global leadership talent strategically, to put the right person in the right place at the right time. Figure 1 provides an overview of the three domains that we will map out in this chapter. Our three-step approach is based on the HC BRidge™ decision framework developed by Boudreau and Ramstad (2001). We have found it very useful for clarifying the business strategy of a company and understanding the implications of that strategy for talent planning and management. The HC BRidge™ model can be used to guide strategic planning or execution, to clarify strategic intent or evaluate strategic investments. Although the analytical tools and discovery process used with the model are very rich and revealing in practice, our description will be quite cursory. Our aim here is to illustrate the strategic links between the globalization strategy and the global talent management system, not to define the business or people strategy in detail. (1) Clarify the Globalization Strategy. This first section lays out the business logic and strategic rationale to answer the question: Why do we need global leaders? The model starts with a focus on Impact, the first of three anchor points that will lead us to an answer to this question. We begin with the identification of distinctive sources of sustainable strategic advantage – the resources, assets and capabilities that enable the company to compete successfully in the marketplace. Then the organization and business processes (elements of the value chain) that support these critical assets and advantages are defined and any constraints and gaps are identified. Finally, the strategic talent pools are targeted, the key roles or groups of employees who play a pivotal part in creating or maintaining the business processes that support the strategic advantages. (In the following discussion, we focus on global leadership roles only, and the talent pools to fill them.)
Strategic Management of Global Leadership Talent
Fig. 1. Overview of the Chapter.
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(2) Define Global Leadership Roles and Requirements. The second section identifies the specific roles global leaders will perform and defines the key responsibilities and competencies that help to answer the question: What kinds of global leaders do we need? This second anchor point focuses on Effectiveness as we drill deeper to determine what kind of global leaders we need. This step begins with a definition of the aligned actions or specific behaviors of the talent pools that deliver the strategic impact and make the most difference in terms of business results. Then, the role challenges are specified. (3) Design the Talent Management System. The final section maps the key elements of the talent management system, identifying those that are most critical to answer the question: How will we develop our global leadership portfolio? Here, we focus on the issue of Efficiency, helping us make decisions regarding how we will develop our global leadership portfolio. Specific HR practices are defined for acquiring, developing and deploying the strategic talent pools. We will use this framework to organize the entire chapter, as well as to lay the groundwork for the first step of the strategic talent management process.
CLARIFYING THE GLOBALIZATION STRATEGY Addressing the issue of globalization strategy and its organization and leadership implications, Ghoshal and Bartlett (Bartlett & Ghoshal, 1992, 1998; Ghoshal, 1987) offer a helpful framework for defining sources of sustainable strategic advantage. They define three strategic objectives – achieving efficiency, managing risk and creating innovation. To achieve these, they suggest that global firms draw in varying degrees on three sources of competitive advantage – national differences, scale economies and scope economies. The resulting organizational strategies balance corporate integration with responsiveness to local markets, giving a range of globalization strategies as shown in Fig. 2. Companies that pursue a multi-domestic strategy focus on assuring high local market responsiveness. Very little is centralized and each national market engages in its own set of value creation activities such as R&D, marketing and production. This strategy is typically associated with high costs, given the extensive duplication in activities, as well as the fact that the opportunities for transfer of competencies are limited within the organization and efficiencies across the organization are not leveraged. The advantage of such a strategy is that when offerings are ideally matched to their markets, the significant added value to the customer wields greater competitive power and yields higher margins through premium pricing.
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Fig. 2. Globalization Strategies (adapted from Bartlett and Ghoshal, 1992).
Other companies pursue a global strategy, leveraging the cost reductions that can come from greater efficiencies. Typically, these cost reductions result from experience-curve effects and location economies. Experience-curve effects result when learning and process improvements are applied across multiple foreign markets, and location economies are realized by performing activities in optimal locations. This is possible when a global standard with minimal differentiation by market is a viable offering. A third option is the international strategy. Such a strategy focuses on creating value by transferring valuable skills and products to foreign markets. While companies pursuing this strategy may establish some functions, such as manufacturing and marketing, within the local markets they serve, the host country or headquarters maintains tight control over marketing and product strategy. Typically, attempts to localize or reduce costs are minimal as the core offerings are seen as having high distinctive value. The fourth type of globalization is the transnational strategy. Bartlett and Ghoshal contend that given the growing intensity of global competition, global companies must become highly versatile. That is, they must exploit experiencebased cost economies and location economies, be skilled at transferring distinctive competencies within the company, and at the same time respond to pressures for local responsiveness. A transnational strategy may be necessary for companies in established markets and mature industries that are experiencing significant pressures for both cost reduction and local responsiveness. However, this strategy is very costly, complex and challenging and usually begins with systematic development of strong business processes and core competencies in one or the
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Table 1. Strategic Framework for Different Globalization Strategies. Multi-Domestic
Global
International
Transnational
Sustainable Strategic Advantage
Responsiveness to local market needs
Efficiency across global operations
Transfer of knowledge to local markets
Responsiveness and efficiency supported by the effective transfer of knowledge to and from local markets
Organization/ Business Processes
• Overseas operations seen as a portfolio of independent businesses • Focus on sensing and exploiting local opportunities
• Overseas operations seen as a delivery pipeline to a unified global market • Focus on implementing parent company strategies • Most strategic assets, resources, responsibilities, and decisions centralized and globally scaled • Tight central control of decisions, resources and information
• Overseas operations seen as appendages to a central domestic corporation • Sources of core competencies centralized
• Dispersed and interdependent assets and resources
• Decentralization of many key assets, responsibilities and decisions
• Informal HQ-subsidiary relationships overlaid with simple financial controls
• Knowledge developed and retained within each unit
Pivotal Leadership Roles
Market Responsive Leader
• Knowledge developed and retained at the center
Global Efficiency Leader
• Focus on adapting and leveraging parent company competencies
• Many assets, resources, responsibilities and decisions still decentralized but controlled from headquarters • Formal management planning and control systems allow tighter HQ-subsidiary linkage • Knowledge developed at the center and transferred to overseas units Worldwide Learning Leader
• Differentiated and specialized subsidiary roles • Differentiated contributions by national units to integrated worldwide operations • Formal and complex management planning and control with integrated and differentiated processes • Multiple and flexible coordination processes
• Knowledge developed jointly and shared worldwide Corporate Integration Leader
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other competitive dimensions – global efficiency or local differentiation – as a solid base to build upon. The transnational strategy often results in the creation and balancing of multiple globalization strategies, applying different approaches to different business functions. We can illustrate this by the example of one major pharmaceutical company that we will call PharmCo. PharmCo’s sales and marketing (including government regulatory affairs) are localized by business units within each country, giving it greater local market responsiveness. Global efficiency is stressed in manufacturing, which is coordinated on a worldwide basis. Support services are shared across the business units within the same geographic area, while research and development is concentrated in only a few locations. Before we begin to examine the implications for global leaders and their development, it is important to note that these strategies are not static. Organizations change strategies for the same reasons they choose them in the first place: customer demand, cost pressures and opportunities for synergy. When these changes are necessary, however, the corresponding changes in terms of leadership requirements are critical and too often underestimated. This is the truest test of talent management strategies and systems: transforming a leadership pool that was developed for one strategic scenario to one that is prepared for an entirely different one. By integrating the work of Bartlett and Ghoshal (ibid.) with the HC BRidge™ framework, it is possible to identify the strategic linkages between sources of sustainable strategic advantage, organization business processes and pivotal leadership talent pools for each of the four types of globalization strategy shown in Table 1. One clear implication of this typology is that there is no single type of ideal global leader. The globalization strategy adopted by the organization will determine what particular type of leader is critical for competitive success.
DEFINE LEADERSHIP REQUIREMENTS Having clarified the core capability or source of strategic advantage at the center of each of the four types of global organization, we will turn our attention now to defining the specific leadership roles charged with making that strategy successful. Then, we will look more closely at the aligned actions – the specific responsibilities and results expected – and related competencies required of leaders who are currently in or being groomed for these roles. Despite the overuse and abuse of “competencies” (see Hollenbeck & McCall, 2003), we believe that when derived directly from the business strategy and closely linked to the specific challenges, responsibilities and results expected of a given role, competencies are a necessary and valuable
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device in the manager’s toolkit for selecting and developing people. This section will focus on answering the question: What kinds of global leaders do we need? Once the essential components of the leadership performance model are defined, we will have the topography on which we can build the talent management system for acquiring, developing, deploying, and retaining the requisite global leaders.
What Kind(s) of Leaders do Global Organizations Need? Many discussions of global leaders focus on expatriates, people who live and work in a country different from their own. While most expatriates fit our definition of global leaders and expatriation is a key strategy for both business results and leadership development, our view is that many non-expatriates are also (or at least should be) global leaders. Therefore, rather than a “global” or “non-global” distinction, we propose looking at a continuum. Dalton et al. (2002) created a global complexity index comprised of the number of countries and number of time zones across which the leader works. We propose building on their concept, as well as Bartlett and Ghoshal’s 1990 model of global leadership roles, to create a multidimensional profile of global leadership. We will first look at the challenges and requirements for global leadership roles in general, and then the challenges and requirements that are specific to the organization’s globalization strategy. We will follow with a link to the competency requirements.
Role Challenges and Responsibilities Global Leadership Roles in General Both Wilson and Dalton (1998) and McCall and Hollenbeck (2002) point out that a key issue with complex roles is the range of constituencies involved. If every manager holds a “360-degree” position where the opinions of the boss, peers and direct reports count, adding more business units or more geographic locations to the mix transforms the circle into a web-like sphere that includes not only internal, corporate constituencies, but external ones as well, such as local media, government and politicians in the host country, and special interests of various sorts in the home country. Dalton et al. (2002) compared “high global” and “low global” managers on personality, experience, role, capabilities, and performance. Examining the issue of diversity of constituencies further, they collected performance ratings from both superiors and direct reports, but they found so little convergence between these two perspectives that they reported only the findings from the boss. They found that
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for both groups the Leader and Decision Maker roles were important. However, the “low global” leaders were also Liaisons, Spokespersons and Monitors. On the other hand, the “high global” leaders were also Innovators and Negotiators. Their thumbnail summary was that low global leaders manage information and relationships, while high global leaders manage action and execution. Shin et al. (2002) compared domestic and expatriate jobs by contrasting the skill and ability requirements. They found that they were quite similar, but that the expatriate jobs were more demanding in all but three of the 21 requirements. This was despite the fact that only a small percentage of the tasks differed between the two groups. The largest differences were in the degree of Social Perceptiveness, Self-control and Achievement/Effort required by the position. Eyring (2001) elaborates further on the specific challenges of long-distance leadership, which increases the complexity of “basic” leadership tasks. Note that long-distance leadership can also be within a particular geography. The challenges they identify are: creating an environment of effective communication, building alignment around business strategy, and fostering individual and group learning. Kiely (2001) adds that a key feature of international virtual executive teams is the reduced informal interaction time. This results in lost creativity and innovation. In addition, establishing trust among team members is made more difficult by both the decreased informal interaction and cultural differences. Black et al.’s description (1999) of the challenges is a good summary of the overall theme: increased complexity of information and relationships. They describe the two key challenges of global positions in terms of Dualism and Dispersion. Dualism is the tension between global integration and local adaptation. Dispersion refers to the spread of resources, especially people, across different locations. Specific Global Leadership Roles In addition to the challenges inherent in global roles, there are some requirements that flow from the globalization strategy. Each global leadership role can be placed along the following continua, as shown in Table 2. Market responsive. To what degree is the role responsible for ensuring that the product or service fits a specific market that is different from other markets? If it is only one market, is it different from the “home” market? Does the single market (e.g. Atlanta) include customers who serve global markets (e.g. Coca-Cola) and who are subsidiaries of organizations based elsewhere? These roles, where the primary focus is to be sensitive and responsive to the local market, may even be in the same country as the company headquarters. This is the primary mission of Barlett and Ghoshal’s Country Manager role.
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Table 2. Key Leadership Roles and Pivotal Talent Pools for Different Globalization Strategies. Multi-Domestic
Global
International
Transnational
Sustainable Strategic Advantage
Responsiveness to local market needs
Efficiency across global operations
Transfer of knowledge to local markets
Responsiveness and efficiency supported by the effective transfer of knowledge to and from local markets
Pivotal Leadership Roles
Market Responsive Leader: responsible for ensuring that the product or service fits a specific market
Global Efficiency Leader: focuses on efficiency in coordinating people and processes in different places
Worldwide Learning Leader: leads people from different cultures and places, sharing and developing best practices globally
Corporate Integration Leader: integrates and balances multiple markets and/or business lines
Bartlett and Ghoshal (1992) equivalent
Country Manager
Business Manager
Functional Manager
Corporate Manager
Key Contributions
• Senses local opportunities and threats • Builds local resources and capabilities
• Strategizes for own organization
• Scans specialized information worldwide • Facilitates cross-pollination of leading edge knowledge and best practices • Is a champion of innovations that may offer transnational opportunities and applications
• Leads and balances negotiations across businesses • Is a talent scout
• Contributes to and is an active participant in global strategy
• Acts as an architect of worldwide asset and resource configuration • Coordinates transactions across national borders
• Develops new and existing talent
Global efficiency. To what degree is the role focused on global efficiency and reliant on people and processes in different places for delivery? Are products manufactured elsewhere? Does managing the global accounts based locally require working with a global account team? Is software code sent back and forth across time zones, taking advantage of skills and cost differences? This is the focus of Bartlett and Ghoshal’s Business Manager. Worldwide learning. To what degree does the role include leading people from different cultures and places? Or cross-pollinating ideas and information from different places? The focus is on facilitating worldwide learning, sharing and
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developing best practices wherever they may originate. This is the role of Bartlett and Ghoshal’s Functional Manager. Corporate integration. To what degree does the role involve integrating and balancing multiple markets and/or business lines? This role could be in a region or at corporate headquarters. This role will vary in its placement on the local responsiveness/global competitiveness space, depending on the organization’s and region’s globalization strategy. This is the nature of Bartlett and Ghoshal’s Corporate Manager. Bartlett and Ghoshal (1992) describe three key contributions for each of their four types of global leader, also shown in Table 2. For example, the mission of the Global Efficiency Leader is to see that the organization capitalizes upon and fully captures the efficiencies that result from the worldwide integration of operations. To achieve this result, the global efficiency leader must contribute in three key ways as a strategist for his or her organization, an architect of worldwide asset and resource configuration, and a coordinator of transactions across national borders. Similarly, each of the other three types of global leader serves a particular purpose and makes important contributions to achieve and sustain the company’s distinctive source of strategic advantage. An organization’s activity along each of these dimensions (market responsiveness, global efficiency, worldwide learning and corporate integration) can be placed on a continuum, from low to high. By this definition, most leaders who work in a multinational organization or have customers who are multinational are global leaders to some degree. Nevertheless, research by Personnel Decisions International (Hazucha, 1995) has found that even managers in multinational organizations ranked the competency “Recognize Global Implications” thirtyeighth out of thirty-nine possible choices when asked to indicate the relative importance to their job. This suggests a view that “Yes, I work for a global organization, but my job is not global.” Viewing global leadership in terms of continua rather than dichotomies highlights the importance of developing a global perspective for all leaders in a global organization and helps managers identify progressive developmental opportunities. It is important to recognize that global leaders are likely to play other kinds of strategic roles, in addition to the roles defined by the globalization strategy. Many global firms grow and expand their reach through acquisitions and alliances; global leaders are needed to manage these business-to-business relationships. Any particular global leadership role may be in a business line or business unit that is in one of the following stages: start-up, growth, maturity/revitalization, or decline/turnaround (Gupta, 1986; Werther et al., 1995). For example, a Market Responsive Leader might be charged with starting up an operation in a new territory or turning around a flagging operation in a mature market.
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Another important role in today’s global organization is that of alliance manager. Many organizations are forming alliances rather than trying to offer all parts of the value chain in every geographic setting. Isabella and Spekman (2001) have identified six roles that are key to success in this arena: Visionary, Strategic Sponsor, Advocate, Networker, Facilitator, and Manager. These and other relevant business challenges should be taken into account as well as the globalization strategy in identifying the requirements for a particular role.
Competencies Once the leadership role, with its particular mission, challenges and responsibilities, has been defined, the competencies required for success can be identified and used for selecting and developing the right leader to fill that role. Competencies frequently help to identify commonalities and differences across roles. We propose a three-level framework of competencies derived from examining the role challenges and responsibilities inherent in each of these four organization strategies, as well as those inherent in managing business alliances and life-cycle stages. At the base are core leadership competencies, those required for any leadership position, in any culture and any global organization. Within this domain there are some competencies where the “how” (specific style or behavior) varies by culture, even if the “what” (category or dimension of capability) does not. Next, we add competencies that are key to success for those working in another culture or across cultures, regardless of role: global leadership competencies. Third, we add those that are required to carry out the strategic task of the global strategy: role-specific competencies. The first set should be used to select and develop people for any leadership position, taking into account cultural variations. The second set should be used to select and develop “high global” leaders of any type. The third set should be used for selecting and developing leaders for specific types of global leadership roles. Core and Global Leadership Competencies Researchers at Personnel Decisions International (PDI; e.g. Goff, 2001) and others in the field have identified four basic clusters of leadership competency: Thought Leadership (smart leader), People Leadership (nice leader), Self Leadership (stable leader), and Results Leadership (motivated leader). Any time leaders are measured or rated, results cluster statistically into these four groupings. Table 3 shows key findings about core and global leadership competencies.
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Table 3. Summary of Research on Competencies. Author
Thought Leadership
People Leadership
Knowledge • Business knowledge (H) • International business knowledge (H) Personality • Openness to Experience (Innovator)
Learning • Cultural adaptability • Perspective-taking (H)
Shin et al. (2002) Job requirements for Domestic and Expatriate Positions; all show differences except where “no diff” indicated
Reasoning Ability • Fluency of ideas • Originality • Problem Sensitivity • Deductive reasoning (no diff) • Inductive reasoning • Information ordering • Category flexibility (no diff)
Social skills • Coordination • Persuasion • Negotiation • Instructing • Service Orientation Perceptual skills • Active listening • Monitoring • Social perceptiveness
Black et al. (1999)
Savvy: business savvy and Perspective: embracing organizational savvy – for uncertainty and both duality and dispersion balancing tensions – for duality Savvy: business savvy Inquisitiveness – at the and organizational savvy core; how leaders transcend coping strategies – for both duality and dispersion
Isabella and Spekman (2001) Alliance Managers
Baseline Skills • Breadth and Depth: broad understanding of the business
Dalton et al. (2002) H = important for high global, L = important for low global
• Process Skills: not what is done, but how
Cognitive Attributes • Recognizing and Attending to Multiple Points of View Simultaneously • Letting the Past Inform, but not Dictate or direct • Seeing Patterns in Chaos and Chaos in Routine • Being Clever, Creative and Constantly Curious • Possessing True Wisdom
Personality • Agreeableness (Perspective-Taking) • Extraversion (Innovator)
• Robust and Complicated Networks: others’ outside function, professional societies • Interpersonal Savvy: flexibility and adaptability to interact in diverse business and social settings • Communication demeanor: speaking and listening, making others feel at ease • Cross-cultural tact and sensitivity: how to relate to others with different values and perspectives without demeaning themselves or their partners
Self Leadership
Results Leadership
Resilience • Coping with stress (H) • Emotional Stability (L) (Intl bus knowledge, Cultural Adaptability, Coping with Stress)
Conscientiousness (H, L) (Cultural Adaptability, Intl Bus knowledge)
Adjustment • Self-control • Stress tolerance • Flexibility (no diff)
Achievement Orientation • Achievement/effort • Persistence • Initiative
Character: emotional connection and wavering integrity – for dispersion
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Table 3. (Continued ) Author
Thought Leadership
People Leadership
Self Leadership
McCall and Hollenbeck (2002) Global Executives
• Open-minded and flexible in thought and tactics • Able to deal with complexity • Value-added technical or business skills
• Cultural interest and sensitivity
• Resilient, resourceful, optimistic, and energetic • Honesty and integrity • Stable personal life
GLOBE (House et al., 1999) Leadership Prototypes in 62 Cultures
Common • Administratively Competent (admin skilled, but NOT orderly) • Visionary (foresight, plans ahead, but NOT anticipatory) Vary • Decisive (intuitive, logical, willful) • Procedural (formal, habitual, procedural)
Common • Inspirational (confidence-builder, dynamic, encouraging, but NOT enthusiastic) • Diplomatic (effective bargainer, win/win problem-solving) • Team Integrator (communicative, coordinator, informed, team-builder) • NOT Self-Protective (asocial, loner) • NOT Malevolent (irritable, noncooperative) Vary • Status Consciousness (class conscious, status conscious) • Face Saver (evasive, indirect)
Common • Integrity (honest, just, trustworthy but NOT sincere)
Robie et al. (2001) Leadership Performance in Eight Countries
Common • Analyze Issues Vary • Use Technical Expertise • Manage Execution • Use Sound Judgment • Establish Plans • Know the Business
Common • Influence Others
Results Leadership
Common • Drive for Results • Show Work Commitment
In addition to looking at roles, Dalton et al. (2002) examined the effect of Personality Traits, Experience, Knowledge, Learning, and Resilience on performance, for two groups of leaders. Low global leaders worked across fewer time zones and countries, and high global leaders worked across more time zones and countries. They found that several aspects of knowledge and experience – Business Knowledge, International Business Knowledge, Perspective-taking, and Coping with Stress – were important for high global managers. For the low global managers, these made no difference in performance. Only two personality traits – Conscientiousness for both groups and Emotional Stability for the low global group – had a direct effect on performance. Other personality traits and experience
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affected performance indirectly, through roles or capabilities. Managers high on the Innovator role were more open to Experience and Extroverted, and spoke more languages. Managers higher on Agreeableness were better at Perspective-Taking. Those who were more Emotionally Stable were better at Coping with Stress. International Business Knowledge was affected by Conscientiousness, Emotional Stability and three Experience variables: number of languages spoken, experience as an expatriate and number of countries lived in. The Shin et al. (2002) study indicates that expatriate positions require all of the same skills and capabilities that are required by equivalent domestic assignments, but at a higher level, with three exceptions (shown in Table 3). Black et al. (1999) propose a model of effective global leadership characteristics that they believe accounts for two-thirds of what is needed to deal with two primary challenges of global leadership: dispersion of resources and duality of local vs. global forces. The other one-third, they say, is business-specific, a function of the organization’s national and corporate cultures, the industry, and the particular business function. The model includes four components: Inquisitiveness: how the leader copes with uncertainty; an attitude of openness, curiosity and exploration; Perspective: how the leader looks at the world; embracing uncertainty and balancing tensions (for duality); Character: emotional connection with others and wavering integrity (for dispersion); Savvy: business know-how and organizational awareness (for both duality and dispersion). Isabella and Spekman (2001) identify competencies that are key for alliance managers: some baseline business skills, cognitive attributes, plus networks, interpersonal savvy, communication demeanor, and cross-cultural tact and sensitivity. Clark and Matze (1999) define relational competence as the extent to which a person or organization can effectively and appropriately manage relationships across a diversity of settings. This is similar to Graen and Hui’s (1999) discussion of transcultural global leadership and its stages of development. McCall and Hollenbeck’s (2002) findings parallel earlier ones, but they add a frequently overlooked area: stable personal life. Much has been made of the fact that most expat failures are because of family adjustment issues. But these authors point out that personal stability of the individual (not just the rest of the family) and “groundedness” are also key success factors. We must also ask: How do these competencies vary across cultures? A classic study, the GLOBE research program (House et al., 1999), helps to answer this question. It began by identifying leadership prototypes across 62 cultures. The
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researchers found that a large number of leader characteristics (30) are seen as universally positive or universally negative, but that a substantive number (35) appear to be culturally contingent; that is, some cultures see them as positive attributes, and others see them as negative. An examination of these attributes shows that many of the contingencies are more about how competencies are demonstrated in particular situations rather than what competencies are required. For example, many Inspirational attributes were universally positive (confidence builder, dynamic, encouraging), but “enthusiastic” was seen as positive in some cultures (like the U.S.) but not in others, where it might seem overbearing and insincere. Visionary, Integrity, Diplomatic, Team Integrator, and Administratively Competent were also positive, and Self-Protective and Malevolent were negative. But Autonomous, Self-Sacrificial, Decisive, Face-Saver, Procedural and Status Conscious were positive in some cultures and negative in others. Whereas the GLOBE study looked at traits, Robie et al. (2001) compared the relative importance of competencies to performance across several countries. They found a high correlation across the country profiles. The most critical competencies were Analyze Issues, Drive for Results, Show Work Commitment, and Influence Others. In addition, managers are selected into management because they are above the required threshold on Speak Effectively, Act with Integrity and Build Relationships. On the other hand, there were slight differences between Northern and Southern Europe in several areas. These findings also focus on cross-cultural similarities and differences in terms of what competencies are important, not how they are demonstrated in particular situations. That is, Build Relationships and Influence Others are important in every country, but how relationships are built may vary: small talk at work, sake in the evenings, social events outside work, lunch, coffee or meetings, with or without discussion of one’s family. Another example of “same, yet different” is a study of U.S. vs. Middle Eastern managers. Scandura et al. (1999) found that both Initiating Structure (task leadership) and Consideration (people leadership) were related to subordinate satisfaction and leadership effectiveness in both groups. However, Consideration was much more strongly related to the leadership outcomes in the U.S. sample. Interestingly, studies that have looked at followers have found more differences than are found among leaders. Leslie and Van Velsor (1998) found that the most effective team members in the U.S. were highly dominant – more dominant even than the most effective team leaders, whereas this was not true for team members from six European Union countries. Hazucha et al. (2002) found a similar pattern: the U.S. non-managers were more like managers, especially on Desire for Achievement and Desire for Advancement. In contrast, European non-managers were lower on these characteristics. These differences in “the led” obviously have implications for the leaders.
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Several studies have been successful in explaining differences in competencies using dimensions of organizational and national culture. Both the GLOBE study House et al. (1999) and Hazucha et al. (1999) found that leaders in cultures higher in Power Distance were less participative and less open in their communication style. They also found that leaders in cultures with higher Individualism scores were lower on teamwork. These cultural values carry profound assumptions about leadership. For example, should it be paternalistic (high power distance, high harmony) or promote equal opportunity (high individualism)? A Synthesis: Core Leadership and Global Leadership Competencies Table 4 shows our synthesis of the competencies required for all leaders and global leaders. The basic leadership role requires a broad range of competencies from each of the four major clusters. Our interpretation of the comparative literature suggests that global leadership positions begin with the same core competencies that are required of all leadership roles, but require higher levels of many of them. Only three new and distinct competencies are necessary: Global Business Perspective, Inquisitiveness and Open-Mindedness, (both are Thought competencies) and Cultural Sensitivity (a People competency). Perspective-Taking (a People competency) is a higher level of Manage Differences. But many of the demands are higher in each of the areas. For example, Planning and Execution are complicated by multiple time zones and work practices, and the physical and mental demands frequently require higher stamina. This continuum of requirements and competencies facilitates our mission of developing global leadership talent, because it implies positions that are less global can help people to develop for positions that are more global. It also identifies the small number of new areas that people need help learning because they are not a part of less global positions. Certain of the core and global competencies are more critical in specific roles (see Table 5). For example, a Market Responsive Leader needs strengths in financial acumen, strategy, focus on customer, market knowledge, building talent, writing and speaking in the local language, local cultural sensitivity, and drive for results. A Global Efficiency Leader needs stronger skills in managing execution, managing and improving processes, financial acumen, and organization knowledge. A Worldwide Learning Leader should be strong in managing and improving processes, innovating, promoting collaboration, fostering open communication, managing differences, and courage. A Corporate Integration Leader needs especially strong skills in the areas of dealing with complexity, strategy, financial acumen, fostering open communication, managing differences, courage, and sustained energy. And an Alliance Manager needs more influence, open communication and perspective-taking.
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Table 4. Core Leadership and Global Leadership Competencies. All Leaders Thought Leadership Judgment
Global Leaders
• Analysis • Decision-Making
• (More complex) • Inquisitiveness and open-mindedness • Able to deal with complexity
Planning and Execution
• Planning • Managing Execution • Managing and Improving Processes
• (More complex)
Business Perspective
• Strategy • Financial Acumen • Innovation • Focus on Customer • Market Knowledge • Organization Knowledge
• (More complex) • Global Business Perspective
• Influence • Engage and Inspire • Promote Collaboration • Building Talent
• (More complex) • (More complex)
Communication
• Write Effectively • Speak with Impact • Listen to Others • Foster Open Communication
• Local and/or corporate languages • Local and/or corporate languages
Interpersonal
• Build Relationships • Manage Differences
• (More complex) • Perspective-taking • Cultural Sensitivity: multi-cultural and/or local cultural
• Drive for Results • Courage
• (More complex) • Sustained physical and mental energy
• Inspire Trust • Adaptability • Self-Development • Stable personal life
• (More complex) • (More demands for resilience and optimism) • (More need) • (More need)
People Leadership Leadership
Results Leadership Motivation and Courage
Self Leadership Self-Management
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Table 5. Most Critical Competencies for Different Globalization Strategies. Globalization Strategy
Multi-Domestic
Global
International
Transnational
Sustainable Strategic Advantage
Responsiveness to local market needs
Efficiency across global operations
Transfer of knowledge to local markets
Responsive and efficiency supported by the effective transfer of knowledge to and from local markets
Key Leadership Role
Market responsiveness
Global efficiency
Worldwide learning
Corporate integrator
Competencies most critical for the role
Thought: • Financial Acumen • Strategy • Focus on Customer • Market Knowledge,
Thought: • Managing Execution • Managing and Improving Processes • Financial Acumen • Organization Knowledge • Global Business Perspective
Thought: • Managing and Improving Processes • Innovation
Thought: • Able to deal with complexity • Strategy • Financial Acumen • Global Business Perspective
People: • Building Talent • Write and Speak in local language • Local cultural sensitivity
People: • Write and Speak in corporate language • Multi-cultural sensitivity
People: • Write and Speak in corporate language • Promote Collaboration • Foster Open Communication • Manage Differences
People: • Promote Collaboration • Building Talent • Write and Speak in corporate language • Foster Open Communication • Manage Differences • Perspective-taking
Results: • Drive for Results
Results: • Drive for Results
Results: • Courage
Results: • Drive for Results • Courage • Sustained energy
A Comment about Languages Languages are always a sensitive issue and these questions need to be addressed: Is the local language needed? What is the tradeoff between language and other key skills? (for example, a company might ask: should we start with a pool of only people who speak the three languages we want, or should we find the person with the best marketing skills?) If a person is responsible for several markets, or moves every few years, is it really realistic to learn
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each language? Can one really expect to become fluent enough to pick up the nuances anyway? How important is mastery of the corporate language in various positions? In Table 5, our model takes into account how many organizations operate: local language and market understanding are important for market-facing positions, and corporate language fluency becomes essential above a certain level in most management positions. Our experience suggests that making the effort to learn a language is interpreted as a sign of interest in and sensitivity to the culture, much more important than mastery of the language. Even people who travel across multiple countries can learn to say “hello,” “thank you” and “good-bye” in the languages they need. This is a symbol of moving toward one’s hosts, rather than always expecting them to adapt.
DESIGNING THE TALENT MANAGEMENT SYSTEM By adapting Bartlett and Ghoshal’s framework and aligning it with the HC BRidge™ model, we have identified the key capabilities (sources of sustainable advantage) that different types of global organizations must develop in order to execute their global strategy successfully. We have also described four global leadership roles (pivotal talent pools) that are needed to develop and manage different strategic capabilities: Market Responsive Leaders, Global Efficiency Leaders, Worldwide Learning Leaders, and Corporate Integration Leaders. Based on the globalization strategy they have chosen, senior managers must determine the particular mix of global leaders that is needed for the organization’s leadership portfolio. Once the portfolio of global leaders has been defined, along with the profile of responsibilities and competencies for each type of role, it is time to design a talent management plan for acquiring, developing and deploying these global leaders (Fig. 3). The design of the talent management system, though driven by the overall business strategy, does not take shape in a vacuum. The broader organization environment and cultural context in which it operates will have a lot to do with its particular features and details. These contextual factors include the governance and ownership framework of the organization (e.g. public sector, private sector, family-owned), political and legal systems (e.g. labor and tax laws), cultural mores (work ethic and family values), and organization history and culture (e.g. norms around differentiating performance and recognizing individual achievement). However, the basic steps in designing such a system and the core components that comprise it are relatively common across organization cultures and contexts. They are: (1) clarify the existing value proposition for talent to offer a fair value
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Fig. 3. Designing the Talent Management System.
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exchange to employees; (2) identify gaps in the talent pipeline; (3) choose the best sourcing solution to fill them; (4) align core talent management processes with the talent required to accomplish new strategies; and (5) build organizational support mechanisms. These steps become even more critical and more complex when applied to an international or transnational organization, and we must look at them in more detail.
Define Value Proposition Clarify Current Value Exchange The term “value proposition” has recently been borrowed from marketing, where experts have long stressed the importance of defining the company’s value proposition for the products and services offered to its customers. Now managerial experts are emphasizing the importance of doing the same for employees in order to attract and retain key talent (Gubman, 1998). We would argue that every organization does present its employees with a value proposition, whether intentionally or not, and the employees also approach a job with certain value expectations. Companies need to evaluate what they offer new and existing talent (their value proposition), and what they expect in return. From the viewpoint of both employer and employee, this value proposition must offer a fair value exchange. Equity theory (Adams, 1965) predicts that when people perceive there is a fair exchange between their investment in terms of effort, time and contributions, and the opportunity provides for success, recognition and reward, they are more motivated to contribute in a way that the organization desires. The Theory of Work Adjustment (Dawis & Lofquist, 1984) proposes that when the abilities of the individual match the ability requirements of the job, employees are more likely to be successful or satisfactory to the employer; and when individual needs are matched by the reward opportunities provided by the job, employees are more likely to be satisfied. Therefore, a solid match on both counts should predict aligned behaviors of individuals in pivotal talent pools. A compelling organization value proposition should be defined for each type of global leader pool, although all value propositions for a given company will likely contain certain common elements based on the overall employee value proposition inherent in the the company’s image, mission and performance record. Once defined by the organization, the preferences of current and prospective leaders in a given talent pool and their perceptions of the availability of each element of the value proposition can be measured to get a sense of the appeal and power of the value proposition to those the organization wants to attract and retain most. Table 6 illustrates the breakdown of an organization value proposition of
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Table 6. Elements of an Organization’s Value Exchange. Organization Provides • Pay for high performance in the top quartile of peer group • Opportunity for career advancement • Appealing jobs in desirable locations • Opportunity to open up a new market • Opportunity to represent a strong brand
Organization Expects • Hard work and high effort • Proven ability to attract and develop top local talent • Proven success building similar business in target market • In-depth knowledge of competitive field • Competencies necessary to fulfill the mission
a Market Responsive Leader that could be matched to the value expectations of candidates for a specific local leader role. Redefine As Needed for Better Fit For a global organization aiming to build a global leadership portfolio, creating a value proposition that works within and across cultures can be a formidable challenge. It requires understanding not only the common needs and abilities of the target talent pool across the broad spectrum of cultural experience, but also the nuances in expectation and communication that are shaped by the cultural context in which a given talent pool or individual has grown to maturity. For example, Market Responsive Leaders in a consumer products firm who have an intimate understanding of the local marketplace, whereever they hail from, are likely to have a higher need for direct impact and recognition through concrete action and immediate feedback. Corporate Integration Leaders in that same firm will have a stronger appetite for managing complexity and dealing with diversity. However, the aspiring Market Leader raised in New Delhi, although equally desirous of an equitable reward for his contribution, may have different expectations regarding how that reward is constituted (e.g. level of pay, at-risk vs. salary-based compensation) and delivered (e.g. pay frequency, taxable vs. tax-free) compared to the Market Leader raised in New York. Similarly, Global Efficiency Leaders based in Tokyo may differ from those based in Milan in terms of their expectations regarding the manner of communication and frequency of feedback they desire and expect from their superiors. In addition, a position in Lagos, Nigeria, and one in Paris, France, may have different levels of appeal. In addition to the attractiveness of the particular position, there are questions about the appeal of the associated career paths. People ask themselves: What are my chances of experiencing different parts of the world (and is this appealing)? Will accepting various positions help or hurt my career prospects? How many promotions can I get in my home location before I have to move to a different
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city or country? Would there be jobs back in my country, or will I need to choose between leaving my country permanently and leaving the organization? Candidates look for the answers to these questions not just in what they are told, but by looking around the company for answers to the following questions: What proportion of the executive team has global experience? Are any of the executives from places other than the headquarters country? What has happened to people who have taken a risk and moved to other places? What has been the advancement record of people like me (e.g. females, engineers, people from India)? The needs and expectations of a culturally diverse global talent pool must be weighed against the need for corporate-wide consistency in policy and process. Different corporate governance structures and policy frameworks, together with local laws, will dictate how much differentiation in the value proposition will be allowable and possible across the enterprise. Companies with a single product, a need to maintain a strong brand identity, and a structure that maintains highly centralized coordination of distribution and delivery systems are more likely to try to have a more consistent value proposition across key leadership pools as well as geographically dispersed operations. For example, many U.S.-based organizations include stock options as part of their compensation package to attract and retain key talent. Yet, in some of their markets, the personal taxation and corporate accounting structure may make this very unattractive or impractical. Ultimately, if it is to affect real behavior, the “perceived” value proposition must have power at the individual level (Ghoshal & Bartlett, 1997). No matter how appealing the basic proposition may be in general, it must be meaningfully communicated and positively experienced by individual applicants and leaders wherever they work and come from. In today’s global market, as the best and the brightest seek out career opportunities that offer the best value exchange, companies that view their most valuable talent as “free agents” or even “corporate volunteers” will have an advantage. Global companies need to be clear about what kind of people they want and need to make their value proposition distinctive and compelling.
Identify Gaps in the Talent Pipeline Forecast Demand, Inventory Supply In addition to evaluating what they have to offer leadership talent in a global market, companies must inventory the types of talent available to them now and in the future. This step starts with a forecast of future needs for the different types of talent in the talent portfolio, including specific numbers, timing and locations. Against this forecast, the current supply or pipeline of talent is identified and appraised. Finally, the size and nature of the gap is determined and critical gaps are pinpointed for follow-up action.
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Demand and Supply should be forecasted for the particular leadership role(s), talent pool(s), geographic location(s) and timeframe (e.g. now, in two years, five years) of most concern. The Demand side is determined through analysis of business growth goals and expected employee attrition trends. First, growth in revenues and operations is defined and translated into specific numbers and locations for critical time periods. Then, expected attrition due to retirements, promotions and turnover is factored in to yield the resulting numbers for the pipeline at each organization level and timing stage. This process is fairly straightforward, involving business analysts in defining the staffing implications of business plans and analyzing employee demographic and turnover data. The more difficult task is to appraise the supply of talent currently available or likely to be available in the future. When appraising the “bench strength” of the company’s global talent, it is especially important to look deep into the pipeline to be sure that the right kind of talent is being acquired early and developed actively enough to be fully ready for placement in the future. We distinguish four types of talent in a given leadership pipeline based on relative readiness to fill a key role. The Ready-now Candidates can assume a given role as soon as one is open. Near-term Candidates are individuals who are acquiring the necessary experiences and competencies and could be ready to perform successfully in a given role within a defined period, say within three years. Promising Prospects show the basic capacity or signs of potential for successful leadership in a given role if developed within a given timeframe (perhaps five years). Those with long term potential for leadership, who are currently at entry-level and very early in their career, make up the Entry-level Pool. Once these available pools have been defined, they can be matched to the company’s need established for different levels and locations by analysis of demand. This is when the critical gaps – including the size, level and location – are finally revealed. In a global company, it is particularly important to manage the entry-level pipeline because people tend to be most flexible and available for significant development experiences early in their adult life and career path. This is a good time to start building the professional foundation of cross-cultural and multiple market experiences needed for global leadership. By this time, however, much of the personal foundation may have already been laid. In their model of global leadership development, Kets de Vries and Florent-Treacy (2002) make clear that much of the personal foundation for cultural empathy and versatility has been formed through earlier family, cultural and educational experiences that are difficult – in some cases impossible – to acquire or compensate for later in life. Another critical consideration for this pipeline analysis is whether candidates are available for general assignment or only for one or more particular locations. This, of course, is the rub for many global organizations. Mobility must be assessed
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early, and on a continuing basis, because willingness to move in general, as well as willingness to move to specific locations, often changes as shifts occur along an individual’s life and career path. When new entrants to the workforce are asked if they would be willing to move, most say “yes.” But when specific offers are made, often times, personal and professional reasons are given for this not being a good time or place. Unless some sense of the mobility of individuals in the pool is taken into account, the real supply and constraints are not known. Method for Defining Talent Supply In a single country, language or cultural context the criteria and methods for appraising capacity for leadership and readiness for a particular leadership role may be generally agreed upon and readily available, although even there it is a mistake to assume there is a high level of consensus and consistency. In a global context, consensus can never be assumed and a process must be established to facilitate agreement not only on the criteria but also on the evidence that will be acceptable for demonstrating that certain criteria have been met (e.g. level of performance and requisite background experiences necessary for consideration, as well as key indicators of leadership potential (Kirkpatrick & Locke, 1991)). If common standards of performance and potential need to be established across the globe, a group representing the various talent pools and talent “marketplaces” must be convened. This body should agree on the criteria to be used, as well as the specific methods and processes that will be employed to assess and develop leadership capabilities. The synthesis of research findings presented in the previous section of this chapter provides a guiding framework to facilitate the work of such a group. It identifies the common profile of leadership competencies that can be used as initial screening criteria for all global leaders, as well as the specific competencies required for success in different global leadership roles. Sampling across culturally diverse operations of a transnational company, Beres et al. (1991) examined beliefs of managers regarding the personal characteristics and skills needed by senior managers as well as their preferences for different management development practices. Consistent with the findings in the previous section, they found that although the weight placed on specific skills and qualities varied by culture, the overall comparative ranking was similar for all managers. This research, as well the experience of many practitioners like ourselves, suggests that building cross-cultural, organization-wide consensus on leadership performance expectations and skill requirements is a very achievable and worthwhile task when managed intentionally and systematically. On the other hand, Beres et al. (ibid.) found that agreement regarding HR management practices – such as methods of selection, performance evaluation and development – was harder to achieve. Therefore, more active facilitation and cross-organization
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consensus building is needed to reach agreement on and commitment to consistent processes for leadership appraisal and development. Tools for Assessing Talent Supply When criteria of excellence has been established, a company must identify or create tools and methods for appraising leadership capacity and competency in a consistent, valid and practically feasible way. There are four primary purposes of assessment. (1) Appraisals of Performance identify strengths, weaknesses and overall results in a current job for performance improvement planning and as a necessary condition for promotion. (2) Assessments of Potential makes it is possible to identify those people with the basic capacity for leadership who could be groomed for a specific global role in the future (e.g. within five or 10 years). (3) Assessments of Readiness allow a firm to identify candidate pools of individuals who could be ready for a given role within a relatively short period of time (such as one to three years). (4) Assessments of Fit indicate whether an individual is a good “fit” for a position and help to pick the best candidate for a specific assignment or position. Many different tools are available for these purposes, including managerial nomination protocols, multi-source feedback surveys, structured interviews, accomplishment records, tests, and assessment centers. Many of these methods have serious shortcomings in terms of cross-individual comparability and cross-organization calibration. Interviews, for example, even when they are highly structured and behavior-based, work better in cultures where employees are used to reflecting on their individual achievements and describing their personal contributions to a particular result. In collectivist cultures, responding in this way is likely to be considered inappropriate. Rarely do talent pool identification and assessment methods have sufficient rigor and credibility to pass the tests of transparency, objectivity, fairness, and cross-cultural applicability necessary for consistent, worldwide assessment of a global talent pool. For initial screening and assessment of basic capacity for leadership, tests that measure cognitive abilities and personality orientations can provide a relatively objective, carefully calibrated and cost effective solution. However, many items are culture-specific, and even those that have the same measurement characteristics across cultures require different norms. Most personality measures available on the market today were created in one cultural context and translated for use in other countries. There is only one instrument that we know of that was developed from the outset as a global instrument with culturally diverse representation built
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into the process of defining of the constructs, developing the items, and validating the instrument: the Global Personality Inventory (ePredix, 2001; Schmit, Kihm & Robie, 2000). Currently available in 10 different languages with culture specific norms, it can be used in many global corporations. However, it is still not universally applicable for companies that operate at the further reaches of the globe and in the many different languages that are spoken on the front lines of leadership. Finding cognitive measures that span cultures is even more daunting. Verbal reasoning is the most potent cognitive predictor of leadership success and all measures of verbal reasoning available today are, by definition, culture and language-specific. As a non-verbal measure of reasoning, the Ravens Progressive Matrices (Raven et al., 1994) is one non-verbal reasoning measure used by some global companies, but it is not an ideal measure of the kind of wide-ranging reasoning abilities that global leaders need. The lack of satisfactory solutions to the cross-cultural measurement of conceptual and analytical reasoning abilities, so crucial for success in our increasingly interdependent and complex global marketplace, is a serious impediment to effective professional practice in our field. A promising, but expensive, solution that offers many practical benefits is in-depth behavioral assessment such as that used in simulation-based assessment and development centers (Stahl, 2001). Kealey (1996) summarizes the benefits of behavioral assessment techniques with this statement: “The best predictor of behavior is behavior. What people say and what people do are often inconsistent” (p. 97). It is the only assessment methodology that provides a standardized and comparable performance situation for participants that can be customized to incorporate the particular challenges and responsibilities of a given global role. Assessment center methodology, which combines multiple assessment methods and uses multiple assessors, was spawned simultaneously in three different countries and has been shown to predict managerial success in many different operating environments over a long span of career history (Howard & Bray, 1990; Thornton & Cleveland, 1990). It has been applied successfully in diverse cultural contexts around the globe (e.g. Royal Dutch/Shell), as well as in highly multicultural organization environments (e.g. the International Monetary Fund). Unlike most other methods, it provides an opportunity to appraise the “whole” person, including his or her versatility in handling a broad spectrum of strategic scenarios, leadership challenges and business situations, a critical capability for global leaders (Sloan, 1994). Moreover, because it provides a simulated immersion experience that approximates the real challenges in the field, it offers rich information for individualized feedback and developmental coaching and can serve as a powerful developmental vehicle for strengthening global perspective and a variety of global leadership skills. Another benefit is that the methodology is transparent to the participants and accessible to managers and practitioners.
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When implemented according to the best professional standards, assessors receive in-depth training in behavioral observation, evaluation and feedback, use tools that provide descriptions of consistent performance standards, and conduct consensus discussions that forge and maintain calibration (Crandell & Conn, 2002). If company managers and internal professionals are trained as assessors, this enables specific language and cultural adaptations where needed, and at the same time builds the organization’s capacity to appraise and develop future organization leaders. Finally, with this method, both the organization and the individual have a better basis for decision-making. One could argue that the cost of identifying those with potential for global leadership and assessing the readiness of near-term prospects in this way is actually considerably less expensive than the best alternative: placing all possible candidates in field assignments and seeing how well they work out. When the multiple purposes and benefits outlined above are taken into consideration, assessment and development centers may end up being one of the most cost-effective solutions for both assessing and developing global leaders at the same time. Tools for assessing individuals for a leadership position may, of course, be applied to internal candidates or, if there are perceived gaps in the talent pipeline of a company, the choice may be to search for an external candidate. This leads us to the next problem in designing a talent management system – where to look for talent.
Choose the Best Sourcing Solution There are two primary sources to go to for needed talent: inside or outside the current organization. And there are two primary types of capabilities that might be needed: more of currently existing skills or substantially new skills. Taken together, this two by two matrix identifies the following four major strategies for sourcing talent. Strengthen Existing Talent Pool The focus of this option is on upgrading the skills and knowledge of existing talent pools through training, coaching and self-development. This is the aim of productivity improvement programs and most routine training and development programs. Also, it is the focus when the company’s growth strategy emphasizes doing more of the same rather moving in a radically different direction. For example, if growth involves acquisition and distribution of a wider range of products – essentially extending the current product line and using the same sales channels – front line sales leaders need to be skilled in overseeing a larger product portfolio and a larger sales force. Intensive product training may be needed along with some sharpening of their skills in staffing and managing a larger sales force.
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The same feeder pool may be used along with the current methods for acquiring this “raw” talent at entry levels. Outplace Existing Talent This is actually an “out-sourcing” option and it may be used in three quite different situations. It is used when the business strategy dictates that new leadership skills or expertise are needed and current staff lacks the capacity to develop those capabilities in the time required. This may involve career planning and advising to help people find a better fit within the larger organization, or transition planning to facilitate outplacement to another company that can provide a better fit. It is also the approach taken when early retirement programs are used to promote a smooth transition for those nearing retirement age and make way for a new generation of leaders. This could involve a special assignment or mentoring role within the company that capitalizes on the individual’s experience and expertise or a package to prepare a path for retirement. Finally, it is used when certain functional groups become external vendors or certain individuals assume an external consulting role because their skills and experience may be highly valued by the organization, but could be provided more cost-effectively on an out-sourced basis. If the organization decides to outplace, it will face different laws in each country. Many countries have laws that restrict the organization’s freedom to act unilaterally. As a result, some suboptimal talent may be kept in some locations, while deeper cuts are made elsewhere. Transform Current Talent This is the focus of high potential development programs for those who have the basic capacity for leadership, but need more experience, training and coaching to accelerate their growth and prepare for higher-level roles with broader scope and more complex responsibilities. This is also the strategy of choice for most strategic talent pools because they must develop proficiency in core business competencies that create or sustain the company’s competitive advantages. If the company’s strategic capabilities are truly competitive, they must be rare and difficult to imitate, therefore they must be developed from within. The value of developing leaders from within was reinforced by Collins (2001) in his study of how good companies have become great companies. This option will often be the focus of those who develop strategic talent on a global basis, especially when a major shift in globalization strategy is involved. In such a case, the strategic capabilities of the organization must be built through new roles, deployed in new organization structures, and distributed to new market territories. This is often the purpose of expatriation and “inpatriation” programs. There are cultural and legal issues here, too. A popular American slogan that reflects a core U.S. cultural value is “be all that you can be.” People can change
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careers at 35 or go to law school at 45. In other cultures, identities are much less fluid. When “I am an engineer” is a key part of one’s identity, going into marketing after 15 years of engineering is unthinkable. Even if one were willing to take the chance, others around might make it difficult through their skepticism. Acquire New Talent This is always the option used at entry points in the pipeline. It is also the option of choice when the organization must be seeded with new skills and experience in selected locations and levels because these competencies cannot be developed quickly enough from within or they are difficult to build from the existing skill base. Often, it is the preferred strategy for filling key gaps in functional groups like HR, finance, legal, and IT whose expertise may be critical, but best developed through exposure to multiple industries and experience in different organization contexts. When global leadership development has been lacking, this is often the method used to find people with the requisite global experience. This results in inveterate corporate “poaching,” which is another factor leading to very high turnover rates of leaders with international experience. Once the best sourcing solution is chosen, it is important to return to the previous step and reappraise the value equation to determine whether any of the key elements need to be changed or whether they will need to be communicated and delivered in a new way. This is especially likely if an organization must acquire new talent or transform the skills of its current talent base. The new talent pool may not know the reputation of the company for delivering certain rewards or the company may not currently offer the kind of rewards expected by a new talent pool. Align Core Talent Management Processes Once a company has compared available talent pools to future needs, and evaluated its value proposition and sourcing options, it must bring its core talent management processes into line with its objectives. Specific changes in policy or improvements in execution may be required to address a critical gap in a strategic talent pool. These core management processes may be grouped into three main pairs according to their objectives: drawing people to the company (attract and retain), assisting people to take on new roles in a company (select/transition), and encouraging people to develop new skills and maintain high performance (mobilize/develop). Each deserves discussion in more detail. Attract and Retain These are companion processes that are used to ensure that key individuals and talent pools are willing to join a particular work group and remain with the company. Such processes are especially critical when the sourcing option
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chosen is to acquire new talent from the outside and retain people who have been targeted for key roles. Attraction activities include creating and strategically placing communications about the company and career opportunities in such a way that they pique the interest of the right kind of applicants. They also include targeting selected applicant pools and recruiting actively at particular schools and professional gatherings. Retention activities include creating and broadcasting positive communications regarding company achievements and its prospects for future success, conducting events that strengthen relationships among coworkers and between supervisors and their staff, and providing career growth and development opportunities. The power of the value proposition in terms of motivating the right people to connect and to stay connected to the company should be examined and strengthened through these processes. One of the most difficult issues for global corporations is attracting and then retaining people who are willing to take on assignments outside their home country or even their current location. Certain companies manage expatriate assignments and the value proposition for expats extremely well, but many do not. When the 2001 GMAC/SHRM study asked companies about their expatriate attrition rates, they found an average rate of 31% within two years after the assignment (this is no doubt an underestimate since 51% of those polled didn’t know or declined to report their attrition rates). Each one of these individuals represents a significant loss to the organization; not only in terms of immediate contribution and longer term benefits to the company, but also in terms of providing potential competitors with a much sharper weapon to strike back in the marketplace. The success of the expatriate assignment also relates to our next pair of processes. Select and Transition These are companion processes because selection for a given role, whether from outside or within the organization, often requires a significant move to a new work group, a new work environment and/or a new work location. These involve important mutual decisions by the organization and the individual, and all aspects of the value proposition affect these decisions and outcomes. Whereas selection decisions and processes typically get a good deal of attention, transitioning activities too often are given short shrift. As a result, the ramp-up time in new roles is stretched out much longer than is necessary. Transitioning activities include support and coaching to help individuals transferring from one location to another, transitioning from one role to another, and being placed within a new work group and organization context. Sometimes, expatriate assignments are the only way to execute a new business strategy or distribute critical skills and intellectual capital, for example to start-up an operation in a new market or oversee integration of an acquisition. Our
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professional literature is replete with documentation of the widespread failure of companies to address key elements of the value proposition for people selected for and transitioning into or out of expatriate roles. Not enough attention is given to both the initial global assignment and the critical question of the individual’s longer-term career trajectory: What will happen next? To deal with this question in advance, one global consumer products firm expects development plans to include not just the next position, but the plan for the position after that. Black, Gregersen and Mendenhall (1992) and Shell and Solomon (1997) provide systematic treatments of the issues and strategies for selecting, preparing and transitioning individuals for global assignments. Mobilize and Develop These are complementary processes that are used to ensure that people in key pools master and maintain high performance in their current role and develop new skills as needed to adapt to and prepare for organization changes and challenges. These processes are especially critical when the best sourcing solution is to strengthen (focus on improving performance in current role) or transform (develop new skills for a new role) existing talent pools within the organization. Performance planning, appraisal and rewards are essential elements of the mobilization process. Development planning, feedback and coaching, development assignments and experiences, as well as education and training programs, are essential components of the development process. Cultural beliefs tend to vary in terms of the “born vs. made” continuum; some believe that leaders are born not made, while others believe that the right training and experience will make the difference. A consensus regarding how much and what kinds of development investment should be made may not be easy in a global company, but it is necessary for establishing the basic platform for global leadership development. The power of the value proposition to motivate key people to perform at a peak level and to grow and develop new skills in response to changing needs of the organization should be examined and strengthened by improving these processes. It is clear that developing global leaders has its specific challenges. Many of the global leadership competencies outlined in Table 4 must be learned through realworld experiences. Dalton et al. (2002) found that people with more “International Business Knowledge” or a “Global Business Perspective” spoke more languages and had more expatriate and travel experiences. Wilson and Dalton (1998) point out that expatriation is an important catalyst for developing “Perspective-Taking,” learning to think and act globally and locally at the same time. Expatriate experience is a catalyst for increasing “Cultural Sensitivity” as well. This is because, in a different environment, one learns simultaneously about oneself and one’s own culture and about others and their culture. Such development, of course, happens
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only if the expatriates are willing to listen and admit not having all the answers, thereby demonstrating and developing “Inquisitiveness” and humility as well. Although living in a different culture is a key development experience for those in global leadership roles – especially those that involve distributing and establishing core business processes and competencies in new markets and operations around the globe – organizations can send only a limited number of people to different countries, and many people are not prepared to move. As a result, organizations are experimenting with different kinds of assignments, including shorter assignments and more extended business trips. This approach may not provide the benefits of full immersion in another culture, but it does provide necessary exposure. In addition, companies are increasingly using simulation-based learning experiences to enable more people to get a palpable feel of a key role in a global context. Many global leaders “in training” realize the need to develop language and culture skills, but are overwhelmed by how to do this. There are too many different language options and becoming truly fluent in another language requires years of study and immersion. One way companies are dealing with this challenge is by creating close partnerships between expats with the business expertise that must be exported and indigenous leaders with the language fluency and cultural savvy necessary to make an effective translation into the local culture. There is already a great deal written on the general topic of leadership development, as well as on best practices and innovative strategies for developing global leaders (e.g. the three volumes of Advances in Global Leadership, Black, Morrison & Gregersen, 1999; Kets de Vries & Florent-Treacy, 2002; McCall & Hollenbeck, 2002; Mendenhall, Kuhlmann & Stahl, 2001). We refer the reader to these sources for a more comprehensive discussion of this critical component of the talent management system.
Build Organizational Support Mechanisms As the core talent management processes are put in place and aligned with the strategy for addressing gaps in the global leadership pipeline, an organization must also establish or fine tune the organization support mechanisms needed to manage, integrate and sustain the various components of the talent management system. These mechanisms include: establishing the governance framework, training and equipping talent builders, conducting talent reviews, and setting up means to measure and reward progress. Establish the Governance Framework Although economic analyses and market forces may drive strategic business decisions, organizational decisions and policies about people tend to be shaped
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most by the particular beliefs, preferences and behaviors of the leaders who make these decisions. Strategic talent pools, especially global leadership pools, are the responsibility of top management. Top managers must communicate the strategic rationale and corporate priorities for acquiring, developing and deploying global leadership talent, as well as the specific responsibilities of targeted talent, their supervisors, and higher-level managers throughout the enterprise. Each leader on the top management team comes to the policy formulation table with a particular mindset and personal behaviors that have been shaped by the organizational culture in which he or she currently works and cultural beliefs acquired through the course of their life, work and educational experiences. Each leader who directs and oversees the company’s talent management system at any level, especially those who have reached the higher levels of leadership in a global corporation, has a varied and complex profile of cultural assumptions that operate when the following kinds of decisions and choices are made: How formalized and standardized will the process be? How centralized will be the control and coordination functions? Which roles/talent pools will be the responsibility of corporate management, divisions and business units? What will be the prevailing policies regarding talent assessment (e.g. use of standardized assessment tools, importance of collective consensus, degree of transparency, etc.)? What will be the prevailing policies regarding talent development (e.g. relative emphasis on buying versus growing talent, expectations regarding mobility, enrollment in specific training programs, investment in development, etc.) What decision-making approach will be used for filling positions or planning for individual development (e.g. consensus, vote, negotiation, individual prerogative, etc.)? How open and accessible will information and decisions be? How will success be defined, results measured, and progress rewarded? Training and Equipping Talent Builders There are several types of talent builders who need to be trained and equipped to play their role in building the global talent portfolio. These include talent scouts and brokers who look for talent and match them to opportunities in different talent markets; coaches and mentors who work with individuals and small groups to provide specific skill building or career guidance; talent systems designers who develop tools and processes for managing talent pools; and senior management sponsors who shape the strategy, make key investment decisions, and oversee the processes for managing pivotal talent pools. Initiatives must be put in place to
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identify these “talent builders” and make sure that they have the skills and tools to carry out these critical assignments. Conducting Regular Talent Reviews The Talent Review (each company has its own name for this process) is the mechanism that senior management uses to manage the strategic talent portfolio. This is the process through which key talent is identified, targeted for specific assignments and development investments, and promoted to new roles. It includes overseeing the inventory of key talent pools (a database cataloging their capabilities, career interests and mobility, development experiences, performance record and achievements), reviewing the talent pipeline (supply and demand), setting goals and tracking progress, and making major investments and day-to-day decisions regarding the global leadership portfolio. In leading global companies today, the Talent Review has become a critical business process that is led by the CEO, extends to all key business entities, and cascades down though all major organization levels. In one large consumer products company, the supply and demand of international assignments is reviewed monthly, helping to reduce the number of last-minute requests and to increase the acceptance rate for developmental offers. Measuring and Rewarding Progress To ensure the sustainability and vitality of any system, there needs to be a mechanism for constructive feedback, critical reflection and continuous improvement. There also needs to be celebration and recognition when positive results are achieved. Success criteria should be established by senior management and backed by measures to evaluate the effectiveness, appraise the progress, and assess the long-term impact of talent management efforts. These measures should answer the key question: Is the system producing a full, rich and ready pipeline of high quality global leaders? Many organizations today are creating “balanced score cards” (Kaplan & Norton, 1996) to establish key indicators of business success and track performance and progress. The advantage of this approach is that it focuses attention on the financial, customer, employee, and community outcomes that matter most. The danger, of course, is the tendency to reduce the richness and complexity of developing strategic talent pools to a simple cipher that may underestimate and even distort reality. Talent development must matter to the individual as well as to the organization. To fully internalize and maintain new learning, people must feel accountable for development and be recognized and rewarded when they make progress. Accountability may come through the use of a performance planning and evaluation system
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for documenting development objectives and reviewing results; by informal, ongoing feedback delivered by a supervisor or coach; or a broad review of talent pool progress conducted by higher levels of management. When individuals and their managers are held accountable for development, more development happens. When it comes to attracting, developing and retaining key people, there is no substitute for hands on, high touch methods, including individual feedback and highly personalized rewards. We must develop the capabilities and inspire the imaginations of talented people one individual at a time, no matter where they are coming from or where they are going to in the global marketplace.
CONCLUSION Several broad conclusions regarding strategic management of global leadership talent can be drawn from our discussion and integration of relevant research and practical wisdom in this chapter. The strategy for developing global leaders should be driven by the strategy for globalization of the business. These strategies evolve as the competitive environment changes and the organization adapts. Diversified companies may have multiple globalization strategies. We define global leaders as anyone who has responsibilities that depend on other geographies. This is a much broader view than the popular focus on frequent globe-trotters. Just as there is a continuum of global leadership, there is also continuity between the requirements and competencies required of leaders in general and those required of global leaders. This is good news for those seeking to develop global leadership. There is no such thing as the “ideal” global leader. Any global company is likely to need a portfolio of different kinds of global leaders. The definition of effective performance in each pivotal role provides the foundation on which the talent management system is built. This definition must include the primary mission, responsibilities and results expected (the “what” of performance), as well as the general and specific leadership competencies necessary to carry out the role (the “how” of performance). The specific methods used to acquire, develop and deploy global leadership talent must adhere to certain common principles, but at the same time adapt to the social, political, legal, and cultural context in which the organization operates. Forging consensus among the different beliefs and behaviors of its
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top leaders and ensuring their commitment to a coherent talent management strategy is especially important. Not all businesses need a comprehensive global talent strategy, although all must understand how they fit into an increasingly global context. Ultimately, global organizations must acquire, develop and retain one global leader at a time.
ACKNOWLEDGMENTS We would like to thank Klaus Schuler, Toshie Miura and Jim Warner for their helpful comments on an earlier version of this chapter; Kay Huntsman for her administrative assistance; and Lea Burdette for her valuable editorial assistance.
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CREATING AND SUSTAINING BALANCE IN GLOBAL BUSINESSES: A PRACTITIONER VIEW John Hofmeister and Sarah Parker ABSTRACT Global businesses create and sustain operational success and create value by balancing the centripetal and centrifugal organizational forces they generate. Productive efforts to achieve strategic and operational success are enabled by the balance of competing tensions not their oscillations. Internal regulators contribute to this balance when they are understood and systematically integrated into both short and long-term decision-making. Inattention to the intricacies of interactive regulating dynamics and systems dilute value creation, or worse, destroy it. The whole business organization must be greater than the sum of its parts to deliver optimum value. Anything less creates gaps which competitors will exploit to the detriment of shareholder value creation. The business landscape is replete with companies that failed to create or sustain balance. There are also examples of great companies that nurture tensions to promote proper balance.
INTRODUCTION Global business leaders and their organizations are successful to the extent they effectively balance competing tensions and powerful forces of authority in their Advances in Global Leadership Advances in Global Leadership, Volume 3, 275–301 Copyright © 2003 by Elsevier Science Ltd. All rights of reproduction in any form reserved ISSN: 1535-1203/PII: S1535120302030149
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organizations. Unfortunately too few understand organization and consequently waste enormous human energy in the struggle to get things done. Amazingly many business leaders consider themselves expert on organization – both the theory and its applications. Few have studied the science or have license to practice the art. Yet they believe their innate ability to lead makes them masters of organization management. A fortunate few have studied theory, consider behavior deeply and manage tensions as effectively as master tuners adjust pianos. The difference between the two types runs potentially into the untold billions of dollars of lost or uncaptured shareholder and business value and constitutes extraordinary wastage of human capital. Strong statements? Yes, indeed. True? Regrettably truth is in the eye of the beholder, since we have no agreed way to measure the consequences. Yet experience says we perpetuate the reality year in, year out. Organization amateurs have no licence to operate locally, let alone globally. Yet they do by the tens of thousands at all levels of too many companies. Engineers and scientists are certificated, as are finance people; sales, marketing and manufacturing staff members are taught key competencies; information technology and human resources staff are professionally trained. Yet organization leaders can be assigned without cognizance of organization competence. Ask many leaders whether they’ve read Jaques (1988, 1991, 2002), Bennis (1998), Schein (1997), Argyris (1993, 1999), Galbraith (1995, 2000), Levinson, or other organization masters, and too frequently receive a blank expression in return. Yet we entrust such leaders to manage strategies, customers, budgets and people, basic elements of organization, in far-flung enterprises across the globe. It’s no wonder so many companies struggle to achieve what they do. Thanks to the adaptive behaviors of people in poorly managed organizations, things do get done! The classic cause of this organization wastage is the inability to balance centripetal and centrifugal forces inside companies. Nature made us all territorial. Thus, when it comes to organization, wherever one works, it is normal to take ownership of one’s surroundings. Those in the center of an organization naturally want to control it, including the distributed parts; those away from the center naturally want to distance themselves from the center to set and control their destiny. The tension that emanates from everyone’s normal territoriality creates warring tribes, and numerous dysfunctional behaviors, that destroy or fail to create value. Global leaders, either in the center or the field, are responsible for resolving these tensions. Without an understanding of organization, many leaders instead fuel such tensions from both directions. Great companies instill in their leaders an understanding of the practice, if not the theory, of organization. They train people to lead organizations either by explicit education or implicit induction. The very
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best companies do both. Great global leaders turn natural territorial tensions into value-creating energy.
CENTRIPETAL AND CENTRIFUGAL FORCES As a physicist would know in the material world, so a business leader should also realize in the organization world, natural forces dominate reality. Thus, in an organization, forces that tend toward the center of an organization are centripetal. Left uncontrolled such forces stifle or suffocate an organization. It will ultimately implode upon itself. Forces that tend away from the center are centrifugal. Left uncontrolled such forces dilute capability in an organization. It will ultimately extinguish itself. What one faces is a perpetual battle of natural forces in organization, which unbalanced, will zigzag from one to the other in a fury of dysfunctional activities, including individual and group behaviors. A couple of examples may help (Fig. 1). A plant manager of an industrial manufacturing plant, long since retired, used to tell his staff that the most valuable real estate in the world were the miles separating their plant from headquarters. And so he ran his plant independently. The plant is long since closed due to its non-competitiveness. The headquarters continues running a successful billion dollar business with multiple integrated manufacturing locations. Cooperative interdependence, i.e. balance, was not within this plant manager’s skill set. A divisional president would do anything to be promoted to CEO so he could “run” his company. When he got his chance he dramatically centralized what had been a collection of successful regional companies. Decision-making moved continuously to the center, as the penalties for local autonomy increased. Manufacturing quality declined precipitously as new product introductions were centrally managed. He was unceremoniously removed following profits
Fig. 1.
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warnings and a significant financial write-down. The new CEO restored much local decision-making power. Both individuals viewed themselves as excellent business leaders with a complete understanding of organization and what it took to be successful. Both were explicitly rewarded for a time by their respective companies for delivering results. Neither, however, ultimately took personal responsibility for the value-destroying outcomes of their choice of organization leadership. Balancing centripetal and centrifugal forces in organizations is neither art nor luck. Balance must be built upon organizational understanding of underlying systems, processes and behaviors that serve as regulators. But there is an inherent paradox in managing this balance. On the one hand, territorial ownership manifests in execution of plans customer focus and cost management, and problem-solving represents “goodness” for most companies. On the other hand it also serves as resistance, even blockage, to the greater good of organizations that seek to deliver “whole greater than the sum of the parts” value creation to stakeholders. Note that structure is not listed as a regulator. In the view of the author’s structure is a much-ballyhooed solution to organization management that has as much destructive as constructive value. That structure is needed in companies is essential. But it should serve as a tool of convenience, malleable as situations warrant, and should not be expected to serve over time as a regulator of organization balance. It is one thing to talk about centripetal and centrifugal organization forces in steady-state companies. Unbalanced, such companies are anything but steady. They are instead facing continuing pressures from the center against the parts and vice versa. Unregulated pressures lead generally to over-reaction of the least productive kind, i.e. structure changes to attempt to “control” the unsteadiness. It is another discussion to consider the circumstances faced by start-ups, acquisitions, divestitures, and companies that embark upon major internal restructurings. Over the years, and not only related to the late 1990s technology and communications-led bubble, or the 1980s U.S.-Midwest and 1990s Western European manufacturing decline, how much value have companies destroyed by virtue of poorly executed organization changes, frequently due to an imbalance of who restructures what? Whether it is rapid growth, growth by acquisition, natural decline, or decline by divestiture, when overwhelming force meets unmoving resistance, whether from the center or the distributed parts of the company, value is lost because organization consequences matter. And far too often a business transaction is predicated on financial engineering, the results of which are not realized, because its formulae are numeric and ignore organization realities. And how much more value has been lost due to acquisition and divestiture activity where willing parties with full intention
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to successfully merge respective organizations have suffered the consequences of shades of resistance and poorly thought through or badly executed integrations? In virtually every case it has been an underestimation, or worse, denial, of the competing centripetal and centrifugal forces that have led to the value loss. McKinsey describe the reality that more than half of acquisitions and joint ventures fail to deliver the value upon which transactions were predicated (Bieshaar et al., 2001). In virtually all cases the value loss is directly proportional to the lack of organization understanding and the associated incomplete preparations to deal with the important centripetal and centrifugal forces of the new organizations. In other words classic, natural territoriality is the bane of deals, not only of steady state businesses. Stories of organization imbalance exist in most organizations during some part of their histories. It is those companies that appreciate organization theory, educate their leaders, and understand the consequences of ignoring organizational measures that most effectively balance the natural competing centripetal and centrifugal forces that successfully endure through time.
WELCOME THE REGULATORS Some companies seem relatively unbothered by competing centrifugal and centripetal forces that could otherwise dominate their business life. Of these there are those who practice certain short-term practical remedies. Among the more useful methods for the short-termers: hire a charismatic, dominant leader who has no time for competing organization forces and who doesn’t want to deal systemically with organization complexity. He or she can control the competing forces of organization for a time. In the end that leader will go away. So it’s critical to then have the next “hero” ready for action. The last century unfortunately has worn itself thin on stories of brilliant, singular leaders of business who were the heroes of their time only to be discredited one way or another after their time. Another short-term remedy is to change the structure of the organization to correct the imbalance. But structure is more often a frequent contributor to tensions. Many believe that new structures establish clearer organization authorities. They may in the short term. More frequently structure changes that pose as remedies to inherent tensions set off a continuous oscillation, where the cure strengthens the disease, and where “what goes around, comes around.” The third and probably most frequently used short-term remedy is to fire and hire replacements for managers either in the center or the distributed parts who obviously “don’t get” how we operate. This too works as a compliance mechanism, but it is a horribly expensive and value-destroying way to run a business, and no one can predict when it’s time to
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Table 1. Regulators of Balance. • Theory • Strategy • Process • Culture • Measures, rewards and incentives • Accountability and performance management • A ‘both/and’ mindset • Coordinative functions • People making it work
fire/hire again. Said simply, short-term fixes are inadequate to balance competing organization forces. They cannot endure. An organization is too powerful and the forces within it too territorial to trust the future to reactionary remedies and quick fixes (Table 1). Fortunately, there are those unbothered companies that balance themselves effectively over time to endure and to create sustained long-term shareholder and other stakeholder value. We will look more closely at three specific companies, the General Electric Company, the Royal Dutch/Shell Group of Companies, and Exxon Mobil Corporation as examples of companies that have endured for more than a century, achieved financial success and reputation, and delivered long term shareholder value through growth cycles, depressions, recessions, wars and bubbles, and who have done so by studying and understanding organization and inculcating organization capability across their leadership populations. Before examining the three cases it would be useful to discuss the regulators of centripetal and centrifugal forces in organizations. The good news is that any business can employ them. Even better, they can be inexpensive to adopt and utilize if they are integrated into the methodology of running a business or company. The bad news is too many businesses do not engage such regulators because they either don’t know or don’t care to know about them. They are perceived as nuisances that get in the way of running things. Those who know no better believe it preferable to manage free of constraints than to be tied to organization theory and practice. And some businesses remember they exist but are reluctant to “take the time” to re-instate them. They’d rather motor on. Still others rely on their current immaturity to resist imposing the “weights” of regulation on their fragile organizations. They do so to their regret. Businesses that adopt these regulators as an intervention against imbalance may find them initially frustrating in the near term. But persistence pays off. Maintaining the intervention over time yields full pay-back and more.
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Theory Without a theory of organization a business operates without acceleration or a braking system. The master of organization theory is Elliott Jaques. Too few know, have read or understand his theory of requisite organization (Jaques, 1988). Easily criticized for his absolutist views, business leaders repudiate Jaques’ thinking as overly complex, impenetrable or deterministic. To their chagrin they suffer the consequences. As we shall see later in the three examples used in this chapter, Jaques’ theory is explicitly or implicitly adapted with profound effect by all three. But even for those who choose other theoretical alternatives, a theory of organization is an imperative for sustained success. Why? A theory is a system of constructs that operates like “big rules” in managing the complexities of competing organization forces. Businesses that eviscerate their centers and assign decision-making to their distributed parts leave value uncreated. Businesses that dominate their parts from the center and deny local creativity and focus, adapted to situational requirements, reduce the value their divisions could otherwise create. A theory of organization can not only resolve the balance issues of competing forces, it can also create the pathways for decisions about allocation of resources, results measurement, new market entries and exits, what businesses to be in, who runs businesses and how they are managed. Amazingly the popular term “just do it” is heard all too frequently across businesses in many companies. Lady luck runs out on those who “just do it” without the guidance and support of a theory of organization. Business is often regarded as simple. “It’s not rocket science” is frequently observed. True. Business itself, the selling of a product or service at a margin that covers costs of capital and other expense and returns a dividend to shareholders and a profit for reinvestment, is by its financial nature not complex. However, add in organization forces and the dynamics of human behavior within organizations and the complexities quickly exceed getting the shuttle into space. Thus, no theory, ultimately no business! More recently, globalization of businesses has demonstrated the extreme challenge of operating without a theory of organization. Too many companies have destroyed value in the search to create it by globalizing their objectives, without a proper underpinning theoretical base. Many growth efforts have been imperiled, or failed, by operating in new circumstances and under different conditions than in relatively better-known domestic markets. Resource allocation and operational leadership have suffered mightily from the absence of a theory of organization as business managers expand into the unknowns of the global environment. If the different legal, cultural and commercial circumstances were
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not difficult enough, the lack of a baseline organization foundation, a fundamental theory, makes it far worse, if not impossible.
Strategy How many business leaders bristle impatiently when the conversation turns to strategy? Too many. There is a view that strategy is a waste of time, business is about tactics, and if it exists, strategy is too often relegated to strategists “who are not business people” [sic]. Yet business history reveals that an organization without strategy is a ship without global satellite positioning. When the balance is off, competing centripetal and centrifugal forces victimize strategy. Where does strategy sit? In the center? In the field? Removed from the action of operations, strategy sits in books on shelves in head offices. Strategy not implemented in the field denies shareholders the value it is designed to create. Over-reliance on strategy that doesn’t relate to local operating conditions wastes resources and frustrates well-meaning operational leaders. Organizations that live their strategies survive and prosper. The creation and implementation of strategic planning for effective operational results can only thrive in a balanced organization. Decisions taken centrally, or locally, outside the agreed strategic imperatives of an organization do not flourish. Resource allocation to support strategy is wasted if not implemented properly. Reviews of strategy require the advice and consultation of operatives in the field and resource allocators in the center. There are few sustainable “one-offs” in successful businesses. Getting the strategic balance right is a critical success factor of thriving organizations. Adapting strategy to cyclical fluctuation, renewing strategy for different conditions and adjusting strategy to fit operating requirements requires careful and patient balance of competing centripetal and centrifugal forces. Strategy combined with theory of organization provides purpose and direction. The alternative is drift and value loss.
Process Organizations need processes to get things done. The clearer and more tested a process, the more effectively an organization delivers results. Too often in the name of speed, spontaneity or tactical decision, process management is ignored in the interests of immediacy. Successful organizations do not overload their businesses with bureaucratic processes, but nor do they succeed without a backbone of processes to support decision-making across a variety of business requirements.
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Critical organization processes include governance, financial management, talent and organization management, order to customer delivery, supply management, strategy and business planning, operations support, and technology and research. Each process is a potential victim of organization imbalance. Get any process out of kilter with the intended decision tree that supports it and a business suffers the consequence of misalignment and inefficient use of resource. A center is the legitimate sponsor and manager of processes; an operating unit serves its vital role by supporting its contributions to processes. Overburden an operating unit with process control, and stifle creative energy that’s needed for customer or operational success. Abandon process leadership in the center and observe as operating units fragment their activities to the detriment of the larger organization. Businesses large and small, new and mature, global and local, all require processes to succeed. These processes are the dynamic mechanisms by which the best companies assert an effective and efficient balance of centripetal and centrifugal organization forces. They choose processes over structures for the primary reason that structures are simple tools of organization that can change whenever circumstances require change. Processes on the other hand are timeless mechanisms, as we shall see in our later examples, and govern the balance of organization forces. In this regard process development and its evolution are perhaps the least comfortable management tools to establish and maintain. They take attention and work. Business leaders who study and grasp organization understand this. Those who deny process importance, including the creation, maintenance and adjustment of processes through time, don’t understand what they are (not) doing. It is no mystery that the valuable contributions over time of Total Quality Management and Six Sigma systems where companies sustain proper focus and investment have much to do with re-engineering ineffective processes.
Culture Culture can be defined as the collective values, beliefs, language and behaviors of people in organizations (Evans et al., 1989), and is ultimately the primary differentiator among competitors in a given industry. Financial, technical and portfolio strengths tend to equal out over time for successful competitors in a given industry. On this basis isn’t it fundamental to promote one’s culture for its value-adding potential and to take the steps to augment, develop and strengthen a company’s culture in both the short and long term? Culture starts to be created from the very first day of a start-up and becomes rooted in a firm’s history. It cannot easily be reinvented. Business transactions
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that bring two or more cultures together at the will of the decision makers often fail to take account of the full implications of previously held values, beliefs, language and behaviors of the people who make up their respective organizations. The typical articulation of taking the best of both cultures and merging them into a new, stronger culture is, frankly, “hooey.” It never works as promised. One- or two-day seminars designed to frame a new culture can only be of limited value, possibly aiding some understanding of each company’s current culture, and setting some goals for the future. The same principle applies to internal restructuring of existing businesses because culture is federal. That is, culture exists at the whole company level, as well as the divisional and geographic, or local, levels. Failure to recognize cultural differences at every level sinks the potential benefits of restructuring. Social constructionists would argue that culture is primarily the co-creating of the people in the organization and their interactions – and constantly evolves. Culture emanates from a long history of people’s experiences with the balance of centripetal and centrifugal organization forces and their respective understandings of how the internal regulators work. Thus, culture evolves rather than changes. Trust as social capital is often its foundation (Hitt et al., 2003, Advances in Global Leadership, Vol. 3). Business leaders who rush the evolution of culture generally lose their way and end up with cultural evolution taking much longer. And, in the process, they frequently create the conditions for fractious and unproductive culture clash in the name of cultural assimilation. Some feel that the unproductive clashes in the near term hasten the formation of a new culture. But reality says it doesn’t. In fact it generally hardens one’s adherence to what one previously held dear. At the heart of such culture clashes are the expectations of central and local forces that people are accustomed to, i.e. their territorial entitlements. Successful use of culture to continuously strengthen an organization is critical to business success. Not only does it provide the glue that synchronizes peoples’ behavior and thus their contributions, it also paradoxically lubricates the frictions that are manifest by centripetal and centrifugal forces. Wise business leaders use time, lots of it, to enable the evolution of culture in their organizations. They operate on the premise that anything worth doing is worth doing well. Consequently they are nonplussed by the stark reality that culture changes with generations of talent over time, not by force of will. They manage the delicacies and intricacies of cultural difference with patience and understanding while persisting in the objectives of the organization’s theory, strategy, processes and other associated regulators. Ultimately a new culture evolves and carries forward in the future, helping to balance centripetal and centrifugal forces.
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Measures, Rewards and Incentives Taken together measures, rewards and incentives operate seamlessly to enable the balance of organization tensions. But implicit is a requirement that they operate cohesively and coherently across and hierarchically up and down an organization. The combination of the three elements constitutes a system and requires a process for managing them together. Fragmented parts that measure, reward and incentivize individuals and groups apart from the requirements of the whole sub-optimize the value-creating activities of people at all levels. Thus, great companies establish measures that are architecturally linked to important success factors up, down and across the organization. Consultants promote an industry advising managements of creative measurement, reward and incentive systems. They particularly recommend tangible solutions that promise explicit outcomes. But practical reality suggests that once basic needs are met with market-based pay, real value is created by the collected activities of people who respond to an implicit, often intangible, set of rewards and incentives, set against not only hard measures of an organization’s objectives, but as importantly, the soft measures that deliver sustained results over time. How much harder can a person work to obtain a monetary bonus when in fact he or she is doing the best they can every day? How much more creative or disciplined is a person who has the added attraction of stock option awards compared to his normal creative and disciplined activities when measured against daily and annual performance plan? Reward for most people is realizing they did a good day’s work. Incentive for most people is being confident they have a secure job in a successful organization with future career growth, thanks to their everyday contributions. It is enticing to create an artificial reality that generally promises more than it delivers. But how real is it? Much worse, what kind of dysfunctionalities does it promote? The use of bonuses and other incentives to reward performance makes sense when they are elements of an overall market pay system that enables as much satisfaction from the intrinsic as extrinsic outcomes of success. The critical success factors underlying a coherent and cohesive system of measures, rewards and incentives are do-ability, comprehension, communication and pragmatism. Exotic, hard to understand, unrealistic measures of success that exceed the capacity of individuals and their available resources are counterproductive. So-called “stretch” targets that are held in front of people rarely incentivize, and more often discourage, sustained performance. Enthusiastic cheerleading from up high to promote unrealistic objectives, in an organization sense, encourages dysfunctional outcomes. In particular, newly assigned business leaders, from CEO’s to unit managers, are high risk promoters of unrealistic measures and
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undelivered rewards, since they often see their purpose as “turning around” or moving an organization to the next higher level of performance, often trashing the efforts of their predecessors in the process. What they fail to realize is that in disclaiming the results of the previous incumbent they are in effect insulting the people that now work for them. It’s no wonder that many new leaders complain about the cynicism of the people they inherit. They often fuel it. If an organization is broken, or not performing, addressing measures, rewards and incentives, without looking across the entire range of regulators, is short-term and narrow thinking. Non-performing organizations are generally out of balance. What’s needed is usually a range of regulatory balancing activities, including a look at the measures, rewards and incentives.
Accountability and Performance Management The only accountability that really matters is doing one’s best with the resources provided. This implies that an organization is populated with responsible people. And it is difficult to imagine that an organization hires and retains irresponsible people! A performance management system that sets achievable explicit expectations against a backdrop of implicit assumptions about who does what work and how, rounds out a performance mindset, provided it is supported by behaviors that enable outcomes. But there is a critical success factor in every credible performance management system. It is the first level supervisor who is accountable for the level below them being able to do their best – and the level above the supervisor being accountable for the supervisor being able to do his/her best – through provision of resources, training and feedback. A hierarchy of managers, which operates on the basis of each level doing its best with the resources available, is the basis of a perfect performance management system. Any system that breaks ranks in the hierarchy, all the way to the top of the center, is attempting to deliver in an imperfect system. The result can only be disappointment. Self-directed teams offer palliative temporary relief to organizations that fail to equip their supervisors with skills and resources to manage. But they are fundamentally unsustainable and unnatural tack-ons to organizations and imbalance the natural order. Teams can only be accountable via the individuals in them and each individual via equipped supervisors. Accountability and performance management are the simplest of regulators to manage, but only if they receive proper attention. Managers are busy people. In the course of their “busyness” it is too often the case that essential conversation about expectations and deliverables slips in priority against other demands.
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The consequence of lowering the priority is confusion among levels of the organization about what matters and what needs doing. Assuming that everyone up, down and across the organization knows what’s expected is high-risk. Leaving discussion about performance to a once-per-year engagement session, if that often, is an invitation to performance disappointment. Regulating the balance of organizational forces implies that people know what’s expected at each level and are held accountable for doing their best on behalf of the person for whom they work. However, the direct supervisor and the manager once removed must, out of necessity, provide the resources and support necessary for each person to achieve their best. To do otherwise means that an organization is dependent upon the whims of fate to achieve the balance it needs to deliver the performance it expects.
A “Both/And” Mindset Conversations between hierarchical or horizontal levels of organizations are dangerous affairs when individuals are asked to or take a position of doing “either this, or that” regarding organization intent or direction. Countless numbers of debates occur at all levels of business about balancing short or long-term objectives, making this or next quarter’s numbers, going right or turning left on strategy or tactics, and usually without a satisfactory conclusion. Participating in discussions where emotions escalate and rank prevails about what a person will or won’t do to achieve organization objectives leads to disbelief and cynicism about one’s commitment to the organization. Loyalty to the center or to the unit where one works is fraught with career risk in many companies. Different levels of the same organization have expectations about what is or should be happening at the next level, where failure to meet expectations carries consequences. Countless staff members are asked to “choose” where their loyalties lay day in and day out. Managers at all levels are frustrated and are frustrating staff by operating digitally, black and white, right or wrong, yes or no, when it comes to organization dynamics and balancing the centripetal and centrifugal forces they face about what decisions they make. In the instances cited above, every business person worth his or her salt knows that both short-term and long-term objectives are critical and that trade-offs need to occur over time. Likewise, with making numbers quarter in and quarter out or making strategic and tactical decisions, there is a time and place for the appropriate decision in the circumstances, provided that over time other choices can and will also be made. Technical decisions about products, programs and systems require binary choice. Yes or no. Organization decisions about choices of design, direction and
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behaviors relating to strategy, operations and tactics require ostensible “both/and” conclusions. Organization is 99.99% non-technical. Yet for the 0.01% of the time a technical decision is warranted, experience suggests that the reverse percentage split is in vogue with countless numbers of managers. Why is this? On the one hand it is a natural consequence of in the moment behavior against a backdrop of punitive sanctions, which most organizations practice. On the other hand people move up a hierarchy of organization over time by displaying the behaviors that recognize the consequences of managing “both/and” versus “either/or.” Basically it has to do with the time span with which one is viewing the present and future. In the immediate daily moment certain choices are naturally binary. Over periods of time the right choice is ultimately “both/and.” Organizations that do not balance future with present time span suffer the consequence of existing only in the here and now. While such behavior may be appropriate for the operative who is expected to do his or her best to meet a daily production schedule, it is fundamentally inappropriate for the next or higher level supervisors who would lead their staff on exclusively “either/or” dimensions. Teaching “either/or” and “both/and” decision-making is the responsibility of the larger organization of which one is a part. Such teaching often occurs implicitly based on observed behaviors by staff and the person to whom they report. This teaching method is inherently dangerous at worst and incomplete at best. Teaching people when, where, what, how and by whom “both/and” decisions are made requires explicit instruction whether through formal or informal interactions, in or out of classrooms. Instilling a “both/and” mindset is not the easiest of regulators to impart across an organization. It is often even more complicated if one works in a technical business where the predominant decision model is “either/or” for obvious technical or program reasons. But the balance of centripetal and centrifugal forces requires that an organization enable its managers to make choices that balance both local and central requirements and expectations. This demands “both/and” capability.
Coordinative Functions Management literature during the 1950s introduced the jargon “line and staff management.” Line management was defined back then as that management which has authority and accountability for decisions that impact organization outcomes. Staff management was defined as that management which advises the line. Unfortunately, the concept has set up a dichotomy of authority and responsibilities that have created organization anomalies about how things get done. What matters in organizations is not the distinction of who is line or who is staff, but which people have responsibility and therefore accountability for what. To suggest that one
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type of manager is more important or responsible than another is na¨ıve at best and dysfunctional at worst. Balanced organizations require appropriately empowered line and staff managers. Centripetal and centrifugal forces are balanced by the appropriate effectiveness of both sets of people at essentially all levels of an organization. An examination of our three cases will note what occurs in many wellorganized successful companies. Line management is accountable for making the decisions that determine outcomes. Line management also works in concert with competent functional managers to achieve best outcomes at all levels of the organization, both centrally and locally. Successful organizations value effective leadership from Finance, Legal, Human Resources, Information Technology, Sales/Marketing, Manufacturing, Technology and other key functional leaders. In fact, organizations that sponsor and promote functional professionalism find that line managements are more effective because of the coordinative impact that functional leaders provide. Aligned functions enable line outcomes. In reality the debate that ensues in too many companies about the efficacy of line over staff managers compromises the effectiveness of functional leadership by too often discrediting or disregarding the roles and importance of functional contributions. Functional leaders have a fundamental responsibility to support and enable the legitimate and ethical goals and objectives of the line organization. They do not exist of their own right or for their own purpose. Their license to operate stems from the needs of the line and is reinforced by the service and advice they provide in pursuit of the larger organization’s objectives. Abuse by functional leaders of the work of the line is as much an issue in many organizations as its opposite. Abuse by line managers requires functional managers to raise their game, up to and including prevention of value-destructive line decisions. It should be obvious that coordinative functional leadership also serves a regulatory role for centripetal and centrifugal forces. From theory of organization, through strategy, processes, measures, rewards and incentives, etc., functional leaders play a critical role in regulating organization balance. Diminish the importance or effectiveness of functional leadership in organizations and stand back to avoid the gyrations of organization imbalance. Recent examples of companies that have cratered and led to the collapse of the technology and communications industries illustrate the value-destroying propensity of line managers operating without appropriate functional support.
Finally, People Making it Work When companies avoid or fail to implement the regulators of centripetal and centrifugal balance, fortunately there is one additional safety net that offers
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reasonable, if high risk, probability of organizational balance. Thanks to the ever-adaptive behaviors of individuals and groups at all levels of an organization, people can make an organization work properly when all else fails. Staff and managers at all levels of a company are blessed with an intuitive sense of the right thing to do under most circumstances. They generally respond accordingly. Most people want to succeed. Even further, survival is the strongest of instincts. When individuals perceive an unhealthy set of conditions, experience disconnects and dysfunctionalities in imbalanced organizations, and convince themselves that things are wrong, they can be counted upon to act to correct the mistakes perpetrated by deregulated systems and processes, or unregulated managers, hopefully before they succumb to organization failure. Examples are legion of personal interventions by individuals to correct organization wrongs. Whether it’s the general manager’s assistant who calls headquarters to report the regrettable decisions taken by her boss, the auditor who reports accounting irregularities to the Audit Committee of the Board, the human resource professional who demonstrates the unfitness of a manager to manage people, the unit manager who takes the risk to do the right thing, contrary to the advice of his manager one or more levels above him, individuals fortunately adapt and behave according to what they believe is the right thing to do, although against many odds. In the same regard that individuals operate for the good of all, so too do networks. People who know people in different segments and at different levels of an organization, either by virtue of having worked together on projects, having been assigned to the same location, or for many other reasons, develop a mutual understanding and connectivity that carries beyond their time together. Thus, members of networks, acting as individuals or groups of people with common experience, also have the potential to operate for the common good. Unfortunately dependence upon voluntary acts of staff as a last resort is a highrisk organizational regulator. What if it occurs too late? Or what happens if the action doesn’t go far enough to have lasting impact? Individual actions may be well meant, but may also contribute to additional unintended consequences because they occur at too low a level or don’t become institutionalized. So while it is good to know that organizations have a last resort safety net, those who count on it exclusively will do so at their peril.
Summary Regulators serve to balance the centripetal and centrifugal forces of organizations. They do their work quietly and mostly invisibly provided they are integrated and
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utilized up, down and across business organizations. They work over long periods and endure through economic cycles. They require only periodic maintenance to remain effective. And when a regulator weakens it can readily be strengthened with modest intervention. But it bears repeating – the organization that doesn’t develop, integrate and use these regulators, or relies on the last one mentioned, risks the undulations of imbalance and loses or otherwise fails to develop the value it has the potential to realize. Cumulatively, the business world loses too much value over time due to the lack of internal organization regulation and carries the disgraceful reputation of underutilizing vast amounts of valuable human capital.
EXAMPLE OF THREE BEST BALANCED COMPANIES Of all the companies in the world today only three meet the following criteria: being listed among the most valuable publicly-held companies by market capitalization at both the beginning and end of the 20th century; maintaining AAA financial ratings at the beginning of their second century as public companies; attaining global reach, operating in most countries in the world; having name and brand recognition universally around the world; having sustained value growth and paid dividends to shareholders virtually uninterrupted throughout their long histories; having managed unabated growth and financial success through growth cycles, depression, recessions, world wars and other volatile and hostile conditions in countries where they operate; continuing to attract and retain excellent talent throughout their long histories; having developed and sustained a reputation for responsible citizenship under the laws of the countries in which they operate; and not being perfect, but demonstrating their ability to learn from mistakes. The three companies are General Electric Company, the Royal Dutch/Shell Group of Companies, and the Exxon Mobil Corporation. They are obviously not the only companies in the world that have achieved success, organization balance or have demonstrated for periods what could be considered best balance practices. Other well-known companies (e.g. Unilever, IBM, BP, Toyota, Matshushita, to name a few) were considered as well. But the three ultimately were selected for reasons of business model complexity, financial history, technology development and application and sustained shareholder value creation. They are three companies that have succeeded so well for so long throughout the world under every business condition over more than a century, while remaining well-positioned for continued success in the next century. None of the three are perfect. Each has been accused one or more times in their rich histories of complicity or conduct unbecoming a great company. But on such occasions each has risen to the
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Table 2. 1997
1998
1999
2000
2001
Royal Dutch Shell Group of Companies (US $ million) Gross Revenue 171,657 138,274 Net Income 7,753 350
149,706 8,584
191,511 12,719
177,281 10,852
Exxon Mobil (US $ million) Gross Revenue 205,397 Net Income 11,732
173,410 8,074
182,529 7,910
228,439 17,720
209,417 15,320
General Electric (US $ million) Gross Revenue 90,840 Net Income 8,203
100,469 9,296
111,630 10,717
129,853 12,735
125,913 13,684
challenge with stronger resolve to impose more effective internal controls in their centers and far-flung operations and to sustain corporate citizenship and license to operate (Table 2). Each company is an organization with a set of sustainable regulators that control and balance the continuous tensions of centripetal and centrifugal forces that occur across their wide scope of activities. Were it otherwise, in companies so large, cumulative tensions from everywhere could diminish their capacity and dilute their results. They have satisfied shareholders and stakeholders worldwide for a long time because they are organizationally balanced and have been and will continue to be as far out as one can see. They know the risks of imbalance. Identifiable imbalances explain their troubles when they fall out of favor or fail to live up to expectations. Let’s explore how these mega-companies thrive while others struggle by assessing the regulators at work in each of the three companies. In the first instance each company has had its experiences with short-termism. Each has had its “hero” CEO at some time during its existence. Reality however is that throughout the term of each dominant leader, there have been other regulators in place to avoid the possibility of a single person creating the conditions that could threaten the enterprise. Each has had many different structures throughout their histories. When a new structure is utilized, it’s recognized that it is fit for a purpose at that time. In other words, it is a tool of its time and replaced thoughtfully but necessarily when future conditions require. Finally, each company has had many experiences with firing and hiring managers at all levels of the organization over time. But each has also concluded and demonstrated by their commitment to leadership and management development that it is far preferable to grow managers over long and productive careers than it is to resort to turnstile management to staff their ever-evolving need for managers of all types at all levels of the organization. Said another way, uneducated managers don’t last at any of these
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Fig. 2.
companies and the company is the primary provider of education and the lessons of experience. All three companies realize that short-term regulators don’t work over the longer term. Their success and sustainability as value creating organizations prove they have adopted the full suite of regulators. Let’s examine them more closely (Fig. 2). We do not intend to describe the well-documented histories of these companies. Suffice it to say that they have each delivered value to shareholders and other stakeholders since the mid- to late nineteenth century. They were each in the top-ten list of companies, defined by market capitalization, at the turn of both the twentieth and twenty-first centuries. Founded by individuals whose names will endure: Thomas Edison, John D. Rockefeller, Marcus Samuel and Henri Deterding (Yergin, 1993), these companies helped create organization theory and practice. They learned and continue to balance centripetal and centrifugal forces the hard way, by doing it. They also adopted lessons of experience and took deliberate steps to incorporate the value of organization theory and regulators as a part of their enduring organization histories. They have earned their place as balance models for companies the world over. None of what they have accomplished has been easy. They each offer themselves as cases for the world at large. Some companies have taken them up on the offer. Although no one can clone them because of their unique cultures and combinations of many coherent management and people systems, nonetheless many, too many, ignore or don’t learn from them. Here are the summary characteristics, indeed the integration of the regulators, of the three companies that enable their balance and success.
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Constructed Systems Over the decades these firms have experimented with the interrelated subsystems of organization, such as hierarchy, accountability, time spans of control of managers at different levels, use of individual estimates of potential for purposes of appointing and developing managers, and variable powers and authority of organization centers and the consequent delegations of authorities among their widely distributed divisions and operations. The cumulative effect of the lessons learned among these subsystems has led each company in its own way to espouse an organization based on their respective use of coherent and cohesive constructs delivering a balanced, systematic theory of organization. They then also apply that theory in practical (and profitable) manner to achieve their objectives over time. None of the companies have had unchanging fulcrums of central/distributed power and none uses the same fulcrum locus as the other. Yet in their own unique ways, over time, they have balanced central and local power distribution, thanks to their systematic constructs. They have each experienced difficulties when the power balance became confused and the tensions between the center and distributed parts peaked. Recent examples of difficulties could include Exxon Mobil’s handling of the Exxon-Valdez incident; Shell’s handling of the Brent Spar disposal; and GE’s handling of PCB clean-up in the Hudson River. It is interesting that each of these examples stems from an HSE (Health, Safety, Environment) dilemma. The test of power balance often stems from the conflict of a strategic vs. operational matter. It’s doubtful such topical imbalance could occur again in any of the companies thanks to organizational corrective actions by all three. Each company has also struggled over the last decade with the implementation of global business structures and the reconciliation of such structures with prior business systems and processes, and sub-strata matrices that had been developed to do business locally. The evolution to global business is difficult even with more than a century of experience in the world at large. Many of the implementation difficulties have involved the need to reconcile central and distributed authority. All three have made enormous progress. Nonetheless it remains virtually certain that all three companies will continue to face challenges to their respective global power balances. Each company clearly benefits from “the whole being more valuable than the sum of the parts” by challenging the parts from the center, and vice versa, on a continuous basis. Each generation of managers has opportunity to revisit the current theory of organization. If change occurs, each instinctively and explicitly adapts and adjusts the parts of the organization to benefit the whole. Each company has in its turn experienced the effects of organization amateurs trying out new
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techniques and has also learned from such experiences. Successful adventures get systematically accommodated into the larger whole; unsuccessful efforts get relegated to the dustbin of experimentation. If the whole benefits, new ideas thrive. If it doesn’t, such change efforts simply disappear. In other words each company has a system of constructs that benefits the entire enterprise and fits within its theory of how it wants to organize and govern itself. Change occurs over time but slowly, slowly, in order not to disrupt the momentum of the past, even while new direction is organically designed to adjust the whole to new conditions or endeavors. News media reports, especially in recent years, have tried to describe organization changes in these companies as “revolutionary, radical or transformational (Tichy & Sherman, 1993).” However, insiders know well that reform is evolutionary, systematic and continuously balances competing centripetal and centrifugal forces for the good of the whole and its parts. Change occurs, but within the decade, not months or a few years. Organization theories are predicated on the natural lives and behaviors of living organisms, because they each recognize people, not money or products, populate their organizations.
Strategic Balance Throughout their histories the three companies are well known for having achieved strategic balance, defined as portfolio positioning around the world in those endeavors that are most likely to create and sustain long-term value creation. Each has also learned from mistakes, when they were out of balance. For example Exxon Mobil adventured unsuccessfully into office products; GE, into natural resource mining; Shell, into nuclear energy. Each has learned that the critical check on strategic balance depends upon local/central tensions finding their appropriate resolution. When the internal systems fail for some reason, external factors also impact balance decisions. Each company has both internal and external systems that correct imbalances. The roles of government, shareholders, analysts, staff, and local communities serve as relevant stakeholders who also help shape the balance over time. Each company is also positioned, through internal checks and balances, to take “big bets.” For example, Shell’s move into deepwater exploration (Howarth, 1997), GE’s expensive protection of its Power Systems business during the orders drought of the 1980s, and Exxon Mobil’s capital intensive integration of its oil products and chemicals manufacturing serve witness to major expenditures for longterm value creation that can only occur with balanced capital decision-making. To sustain strategic balance, each company continuously scans the macroeconomic environment by well-developed internal systems that monitor and balance inputs from inside its distributed organizations, its central strategic
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planning group, and the external world. GE is often credited with “inventing” strategic planning in the 1970s. Shell is world-renowned for its “scenarioplanning,” also dating from the 1970s. Exxon Mobil’s strategy system may be less publicized but has earned the respect of its competitors because of its constancy and its focus on execution. All three have committed themselves to planning their respective strategic balance.
Process Capability Implicit in long-term success is an enterprise-wide commitment to managing key business processes well over time. Among each company’s many processes, three are especially critical: a well-engineered strategy process, cited above; a comprehensive financial management process that enables managers to plan and execute business plans over measured periods of time; an equally comprehensive talent management process that assures human capability for both near- and long-term business requirements. The components of the three processes reflect an amazing balance of corporate requirements, as seen from the strategic time-span horizon of 25–50 years of the center, right down to the local operating units’ contributions to the process management that relates to the in-year work required to meet objectives. The fact that no component part of the organization is relieved of its individual responsibility, and the fact that the senior most executives of the corporate center are directly involved in reviewing the roll-up of the operating business submissions in each company are testimony to the systemic, coherent and cohesive nature of the three processes that work together for the benefit of the whole organization. Needless to say it takes discipline and practice to manage and execute these processes, year in and year out, through business cycle after cycle. At the same time, each process contributes to an integrated balance of distributed and central authorities as organization tensions surface at the different stages of process results review. The processes surpass structure as organization regulators because of their consistency and durability, regardless of organization structures. Staff members know from their earliest years to take these processes seriously. Personal and career success is directly related to process contribution and use. While these three processes may dominate the long-term success of the companies, other processes are effectively used as well. Each company has a robust governance system and accompanying process that examines, for example, business integrity; each company, perhaps different by business, evolves its order entry to customer fulfillment process; each also has delivered enormous shareholder benefit by virtue of its increasingly well-managed supply chain
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management process. Each company has achieved success from its respective technology and research processes. From the corporate center to the most distant operating unit, each company in its unique way assures that process management is taken seriously and is part of the accountabilities of each level of management. It is through such committed methodology that centripetal and centrifugal forces are balanced, and through such exacting discipline that staff at all levels are part of a vigorous and dynamic operating unit and part of a successful, much larger entity.
People and Culture Matter Anyone joining one of these three companies, from entry level to senior level, learns in no uncertain terms that people and culture matter. Each is proud of its “strong culture.” Each company has on-boarding systems that imprint individual memories on every new person that last throughout a career. Each has a well-developed rewards and benefits program that deters staff from other employment and promotes commitment. Each focuses on development and education for the long-term capacity enrichment of staff at all levels. Each has robust communications processes that attempt to connect staff to both what they need to know and what’s nice to know about the company, its customers and other stakeholders. In other words, each company takes people processes seriously and commits time, energy and resources to establish and renew fit for purpose, short and long term, people programs and organization culture. Each has the capacity to support career-long commitment by staff, yet none commit to career-long contracts. Each company promotes programs that enable long careers while maintaining flexibility to move people in and out of the organization as economic and business conditions warrant. Yet each is recognized by staff and communities for contributing to the long-term employability of anyone who works there. The cumulative effect of trust, language, values, and behaviors continuously reinforces organization culture. Each company is a story unto itself when it comes to describing its management culture and its management continuity. Each is renowned for investing in both classroom and experiential development of its managers. There may be times when one method is preferred to the other, but over the decades each company has been noted for its classical management education. There is a strong belief that organization success derives from managers who know what they are doing and why. There is an ongoing commitment to enable managers to understand the organization’s history, priorities, processes and management systems. Thus, each company contributes to its own continuity by its investment in itself. None of
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the companies has had to expropriate executive talent from elsewhere to lead the company because it has adequate internal supply. Yet each company improves its own diversity by selectively bringing in outsiders at different levels of the organization to percolate different experiences within the organization, while simultaneously assimilating such executives into its own culture. People and culture operate in integrated ways to impact centripetal and centrifugal forces and tension resolution. Each member of staff is part of a federalized company: they join each company based on its holistic attractiveness; they commit their work to a specific business or work location; they ultimately retire from the holistic company they joined. Throughout their years they experience and contribute to the push and pull of central and distributed forces. Their collective satisfaction and success results from the continuous balance of such forces and the work they perform.
Functions Perform The three companies are reputed for the strength of their respective line managements. Facing critical decisions year in and year out on capital allocation, net income, shareholder dividends and other financial measures in the billions of dollars, portfolio decisions that impact tens of thousands of staff and their families, and decisions that impact the everyday work lives of hundreds of thousands of staff, line managers in these companies are respected decision-makers. They have to be. But alongside each line manager sit appropriately positioned and well-informed functional leaders who assist line decision-making and business execution. Business and functional management are hand in glove partners to organization success in these three companies and have been so for decades. For example, GE initiated functional management programs in the 1950s to provide for the long-term education and development of functional professionals and leaders in such areas as finance, manufacturing, engineering, and human resources. Shell and Exxon Mobil’s organization histories are replete with the contributions of key functional leaders across the staff spectrum. Functional leaders provide the coordinating influence that balance business and stakeholder needs with organization imperatives. Business leaders make choices. Function leaders inform those choices by enriching context, providing data and analysis, and offering perspectives and recommendations. It is impossible for business leaders to be sufficiently well-informed on the many issues they deal with to decide everything intuitively. Yet an organization cannot suffer from lack of preparation when decisions are required. Talent management systems in all three companies focus on both business line and functional
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staff development to equip both groups of people for their decision-making responsibilities. Functional leaders in each of these companies do not rest on their staff laurels. Each is expected to be in and of the business of which they are a part. In addition, at more senior levels each is measured on the basis of an annual performance contract, just like their business peers. There is a common phrase among all three companies: what gets measured gets managed. As a consequence business line and staff managers alike are measured for what they contribute. There are no easy jobs in these three companies. But among the most challenging responsibilities of staff functions, especially finance, human resources and legal, is the ongoing responsibility for delivering the coordination that enables the appropriate centripetal and centrifugal balance of the parts and the whole.
Summary Shell, GE and Exxon Mobil are successful companies and have been so for more than a century of business history. The credit is due to the enduring strength of their organizations and people who deliver results over the decades. Their success is derived from organization balance that comes from the integrated use of all available regulators, including an organization theory, strategic balance, process excellence, people and culture, and functional capability. There’s no magical formula, luck, or constant celebrity at the top, to engineer the success of these firms. Their respective success comes from decades of organization experience, lessons learned, mistakes overcome, and thousands of individuals who know what they are responsible for and who are accountable, through their supervisors, for delivering on expectations. The behaviors that staff members learn from experience and education, implicit and explicit, imbue these organizations with behavior patterns that balance the tensions that otherwise consume untold unproductive energy that leaves value uncreated or unrealized. Competitors and shareholders should take note. These companies are well positioned in their second centuries for continued balanced success.
CONCLUSION: “SO WHAT” DELIVERS “SO THAT!” Business is the “so what” that creates value and delivers returns “so that” shareholders earn a proper reward for their investment. A business organization delivers all business results. Businesses require a center and component parts to get work done and make returns possible. Businesses function for the good of shareholders
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when they operate effectively and efficiently with proper resources. Proper use of resources requires decisions that balance their deployment. Organizations that succeed in deploying resources and sustaining such deployment successfully balance the natural tensions that pull toward or away from the center of decision-making. Organizations that rely on structures, heroes or turnstile management to deploy resources are unsuccessful in time. Organizations that develop internal balance regulators and effectively deploy them at appropriate levels hierarchically and horizontally across their units, increase the likelihood of successful deployment over time. Business history demonstrates the degree of difficulty companies face in properly balancing the centripetal and centrifugal forces that affect them. Potentially great companies have ceased to exist by lack of proper internal regulation; mediocre companies never achieve the greatness to which they aspire for the same reason. In the meantime, too many billions of dollars of value are wasted, not created, or go unrealized for the lack of coherent, cohesive internal regulation within organizations. Business may not be “rocket science,” but anyone who approaches organization on the assumption that they “know it in their gut” or “anyone can do it,” look out. Such individuals may know the “so what” of business, but they are incapable over time of delivering the “so that.” Organization is both science and art. Both take years of study and decades of practice. Success goes to those companies that master it and who practice it from their organization centers to their farthest flung operations. Too few currently do. We can always hope that more will in future.
REFERENCES Argyris, C. (1993). Knowledge for action. Jossey Bass Wiley. Argyris, C. (1999). Flawed advice and the management trap. Oxford University Press Inc. Bennis, W. G. (1998). On becoming a leader. Arrow. Bieshaar, H., Knight, J., & van Wassenaer, A. (2001). Deals that create value. McKinsey Quarterly. Evans, P., Doz, Y., & Laurent, A. (Eds) (1989). Human resource management in international firms (pp. 656–887). London, UK: McMillan Press Ltd. Galbraith, J. R. (1995). Designing organisations – An executive guide to strategy, structure and process revisited. San Francisco, CA: Jossey-Bass. Galbraith, J. R. (2000). Designing the global corporation. San Francisco, CA: Jossey-Bass. Hitt, M. A. et al. (2003). Strategic leadership in global organizations: Building trust and social capital. Advances in Global Leadership, 3. Howarth, S. (1997). A century in oil: The “Shell” transport and trading company 1897–1997. London, UK: Weidenfeld and Nicolson. Jaques, E. (1988). Requisite organization. Arlington, VA: Cason: Hall and Co. Jaques, E. (1991). Social power and the CEO. Westport, CT: Quorum Books.
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Jaques, E. (2002). The life and behaviour of living organisms. Westport, CT: Praeger. Schein, E. H. (1997). Organizational culture and leadership. Jossey Bass Wiley. Tichy, N. M., & Sherman, S. (1993). Control your destiny or someone else will. New York, NY: Currency Doubleday. Yergin, D. (1993). The prize: The epic quest for oil, money and power. New York, NY: A Touchstone Book, Simon and Schuster.
INFLUENCE AT A DISTANCE: LEADERSHIP IN GLOBAL VIRTUAL TEAMS Donald D. Davis and Janet L. Bryant ABSTRACT Global virtual teams include members from multiple nations and cultures who must work together while being separated by time and space. We discuss leadership in global virtual teams and how distance influences the full range of leadership required at multiple levels of the organization. We use research literature devoted to virtual teams as well as our own data collected from interviews with leaders and members of global virtual teams to highlight factors related to global team effectiveness, satisfaction and commitment. We provide a model of leadership in global virtual teams that integrates previous research findings and may be used to guide future research and practice.
INTRODUCTION We should accept lower effectiveness in virtual teams. I don’t see any other option. Coordinator of information technology support operations and leader of a global virtual team.
High velocity change caused by globalization, technological innovation, fierce competition, and rapid knowledge growth has created immense turbulence in Advances in Global Leadership Advances in Global Leadership, Volume 3, 303–340 © 2003 Published by Elsevier Science Ltd. ISSN: 1535-1203/PII: S1535120302030150
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the environment for organizations. The pace and unpredictability of this change make it difficult to use past experience to plan future action. Organizations must instead develop the ability to respond spontaneously to environmental threats and opportunities as they arise. By eliminating the boundaries within and between organizations that constrain action, organizations can move more nimbly. Boundaries may exist between individuals, groups, departments, levels of authority, geographic regions, cultures, temporary and permanent employment status, time periods, competitor and collaborator status, customer and employee status, purchasing and selling organizations, and work and home (Davis, 1995). Teams provide a powerful form of work design because they eliminate several of these boundaries. Teams have become the dominant form for organizing work in large North American companies (Lawler, Mohrman & Benson, 2001; Mohrman, Cohen & Mohrman, 1995). At the same time, organizations have taken advantage of new technologies, especially email and the Internet, which have greatly enhanced their ability to communicate and collaborate across great distances. These two trends are now intertwining and making possible new forms of teams called virtual teams. Virtual teams consist of members who seldom meet together and, instead, use communication and information technology to bridge differences in time and space (Lipnack & Stamps, 2000). The idea of being “virtual” was first used in the 1960s to describe the temporary allocation of memory to increase power in the IBM 360 series of mainframe computers. Being virtual implies a temporary surge in power that results from marshalling distant, disconnected resources. Virtual teams represent a temporary increase in power that results from marshalling distant human resources. Virtual teams enroll members on the basis of their knowledge and skills regardless of their location. When virtual teams include members from multiple nations they become global virtual teams (GVTs). We distinguish GVTs from domestic virtual teams, which are comprised of members from a single country. GVTs are more challenging to manage because of cultural differences and greater distance in time and space that separates members. GVTs typically perform knowledge work, which requires the generation, compilation and interpretation of information and knowledge (Mohrman, 1999). They are typically temporary and are formed to plan, create or implement some innovation, for example, create a global performance appraisal system. Once the task is completed, the GVT disbands and its members move on to new team assignments. In some cases, a GVT may exist for many years, but its membership may change over time. For example, a permanent GVT with changing membership may oversee legal issues in different nations. GVT members, especially technical and senior managers, often work on multiple virtual teams.
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GVTs are an example of an organization’s efforts to increase its flexibility and ability to adapt to fast-changing environmental conditions by eliminating boundaries that constrain freedom of action (Davis, 1995). In this case, the constraint of forming teams consisting only of individuals who are located near one another is removed. This geographic flexibility allows the organization to seek team members with the greatest talent regardless of their location. The ability to deploy GVTs successfully yields competitive advantage because it expands the pool of available human resources. Working virtually also reduces travel time and costs, although this should not be the chief motivation for their use. GVTs can also have a dark side. Separation in space and time can reduce individual commitment and can increase social loafing, role ambiguity and role overload, as well as other undesirable effects (O’Hara-Devereaux & Johansen, 1994). Moreover, firms often neglect to address the special needs of GVTs, thus rendering them less effective than collocated teams. Little research concerning virtual teams has been published, despite their growing popularity and use. Published reports variously describe GVTs as the latest global management fashion (e.g. Geber, 1995; Townsend, DeMarie & Hendrickson, 1996, 1998), summarize consulting experiences (e.g. Duarte & Snyder, 1999; Lipnack & Stamps, 2000), or provide conceptual models (e.g. Maznevski & Chudoba, 2000). The few empirical studies that have been published typically employ small samples, or analyze a small number of cases that usually describe university students working on contrived tasks (e.g. Jarvenpaa, Knoll & Leidner, 1998; Jarvenpaa & Leidner, 1998). Some scholars are beginning to think about the leadership needs of virtual teams, although they have ignored for the most part the special challenges of working globally (Avolio, Kahai, Dumdum & Sivasubramaniam, 2001; Bell & Kozlowski, 2002). With few exceptions (Kayworth & Leidner, 2002), researchers studying leadership in GVTs have not measured it directly or given it a central position in their research design and hypothesis testing (e.g. Jarvenpaa & Leidner, 1998). Perplexity concerning the best means for managing and leading GVTs has accompanied their growing use. To work globally means to spread activities across multiple time zones, nations, cultures, functions, professions, and organizations. Complexity grows with this diversity and stretches the leadership and management capabilities of those who must lead GVTs. As one of the managers in our study states at the beginning of this chapter, the complexity of GVTs may exceed the skill of those charged with leading them; organizations may have to learn to accept less effectiveness when managers work virtually. Yet organizations must learn to manage the complexity of GVTs because virtual teams will become an essential means for organizing work as firms expand their global reach and, more importantly, as organizations begin to recognize that they hobble their
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ability to compete when they do not search globally to staff teams with the best talent. We examine leadership at a distance in GVTs in two ways. First, we use existing literature to identify the leadership characteristics of GVTs. Second, we use data collected from a study of GVTs to illustrate and support the importance of these leadership characteristics. We describe next how we collected our data. We then provide our model of leadership in GVTs and discuss the literature and our findings used to support it.
THE GLOBAL VIRTUAL TEAM STUDY The results we report throughout this chapter come from a study of GVTs that was conducted in Asia and Europe in 2000 and 2001. Although our respondents were located in Asia or Europe, the virtual teams they describe include members from nations throughout the world; hence, we refer to them as global virtual teams. Sixty-eight managers describe their experience as members and leaders of 104 GVTs. Managers who were members of multiple GVTs were asked to report their experiences on each team. Teams represent such functions as human resources, customer support services, information management, sales and marketing, project/ technology development, manufacturing, planning, and research and development. Managers came from four multinational firms that, collectively, have operations in most nations of the world. These firms conduct business in several industries, including investment services, semi-conductors, computers, telecommunications, office equipment, and petroleum and chemical refining and manufacturing. The first author conducted interviews in each manager’s office, except for three, which were conducted by telephone and videoconference. Managers were located in Amsterdam, Bangkok, Beijing, Melbourne, Hong Kong, Kuala Lumpur, London, Rotterdam, Singapore, Sydney, Taipei, and Tokyo. Although the managers were located in Asia and Europe, they represented many nationalities. Teams were all multicultural because they were comprised of members from at least two nations. Teams were split about evenly between global and regional responsibilities. We intended to strike a balance between confirmatory and exploratory research. On one hand, we wanted to examine whether existing theories of leadership could be extended to include GVTs. On the other hand, we wanted managers themselves to tell us what makes their GVTs more or less effective and what determines their attachment to them. We were careful not to impose a priori assumptions but, instead, allow managers to influence our thinking and question development. We used semi-structured interview procedures with a mixture of closed-ended and open-ended questions.
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Interviews typically lasted from one-and-one-half to two hours, with some interviews lasting as long as five hours. Some questions were asked of almost all respondents, while other questions were asked only where relevant. Open-ended questions were coded for the existence of GVT-related constructs, for example, use of goals. A construct was judged to exist when at least two respondents reported a similar experience and at least two coders could independently agree on interpretation of this reported experience (see Miles & Huberman, 1994). Verbal reports for each respondent were coded for the presence of constructs. In this manner, we built a set of variables from the verbal reports of managers’ experiences. We quantified our variables where this was possible and relevant. We calculated zero-order correlations between variables where possible. The sample size varies for statistical analyses because not all questions were asked about all teams. The sample size for most analyses is about fifty teams. We also used the verbal reports to understand quantitative relationships at a deeper level. We worked back and forth between statistical results and verbal reports to deepen our understanding of leadership in GVTs. We asked all participants to describe the effectiveness of the teams on which they worked as well as their satisfaction with and commitment to these teams. Together, team satisfaction and team commitment represent the attitudinal and emotional engagement of team members with their team. Engagement of this sort is important because it predicts business unit outcomes, such as customer satisfaction, productivity, profit, employee turnover, and accidents (Harter, Schmidt & Hayes, 2002). These three outcomes were then correlated, where possible, with all of the factors related to GVT leadership and practice that were discovered in our interviews. We use these data to highlight our discussion of GVTs. A more detailed presentation is available in Davis, Bryant, Tedrow, Liu, Say and Mihalecz (2002).
GLOBAL VIRTUAL TEAMS We begin our discussion of leadership with our conceptualization of virtual teams and how they change when they become global. Numerous definitions of virtual teams exist; our definition incorporates elements from several of these (e.g. Lipnack & Stamps, 2000). We define virtual teams as two or more individuals who use a mixture of communication and collaboration technologies to interact interdependently across boundaries of organization, time and space to achieve some common strategic purpose for their organization. Virtual teams become GVTs when they include members from multiple nations and cultures. We now unpack this definition to emphasize the special features of GVTs and their implication for leadership.
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Two or More Individuals. Specification of the number of individuals on the team and who they are is important because this defines the boundary of team membership. This boundary determines who is part of the team and who is not. This membership is recognized by other members of the team as well as by others inside and outside of the organization. Most importantly, the team’s boundary shapes the development of team identity (at least in individualist cultures), just as one’s skin provides a boundary that helps to shape personal identity (see Markus & Kitayama, 1991). Team identity, in turn, influences team process and team outcomes (Turner, 1985; Turner, Sachdev & Hogg, 1983). Team identity also influences a team decision-making, for example, who receives email correspondence. Leaders use team identity to foster development of a shared understanding of the work to be done (shared mental model) as well as to foster attachment and commitment to the team. Use Mixture of Communication and Collaboration Technologies. In contrast to collocated teams, where team members are located near one another in space and time and communication can easily occur during face-to-face contact, GVTs have to rely on additional communication media. Commonly used communication tools include email, telephone, voicemail, company intranets, teleconferencing, videoconferencing, virtual private networks (VPNs), Internet-based collaboration websites such as WebEx and Live Link, and personal computer-enabled collaboration software such as Lotus Notes and Microsoft NetMeeting. Leaders of GVTs use the proper mixture of collaboration and communication technologies to amplify and extend their influence. To Interact Interdependently Across Boundaries. Shared goals and mutual purpose ensure coordination and collaboration. Team members become interdependent due to shared fate. Like a team of horses without a set of reins that ties them together, team members without interdependence “pull” in their own direction. This is a recipe for team failure. Interdependence with others in and outside of the organization is also important because these others can provide resources to help the GVT do its work. For example, customers who share their perceptions of products or services provide valuable information to the GVT. To Achieve Some Strategic Purpose. The firm’s competitive strategy should be used to provide direction for team efforts. Organization structures and processes must be aligned with strategic goals to enable team coordination and performance. For GVTs comprised of senior managers from multiple nations, the task may be to create a company-wide set of practices or procedures that implement a strategic goal set by the firm’s governing group, such as increasing safety or earnings growth throughout the world. For GVTs comprised of country-level managers from one region of the world, the task may be to implement the firm’s global strategy throughout the region. A virtual team within each country may
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next create a national plan to implement the safety and earning goals. Collocated teams may finally plan how to implement these strategic goals at a single site. Leaders must ensure alignment of team goals across each of these levels. These elements of the GVT definition highlight the leverage points for leadership. To lead GVTs effectively, one must lead them as teams, not as collections of individuals. Collaboration and communication tools must be implemented, adapted and used successfully to encourage interdependent interaction across boundaries. Interaction must be harnessed to pursue strategic goals of the organization as defined at the level at which the GVT is working. Organization structures and processes must be aligned to support team efforts. We had two goals when developing our model of leadership in GVTs. First, we wanted to extend existing leadership research to include the special case of GVTs. Our focus is on determining how and in what manner existing theories of leadership can be used to understand GVTs. We believe that existing theories of leadership, perhaps with some modification, are sufficient to understand GVTs. We do not believe that a new theory of “virtual leadership” or “e-leadership” is necessary at this point. Second, we wanted to identify the unique features of GVTs that may pose special challenges for existing theories of leadership. That is, we wanted to identify the “nooks and crannies” that existing theories of leadership must fill to extend their reach to include GVTs (cf. Hunt & Peterson, 1997).
LEADING GLOBAL VIRTUAL TEAMS Leading Across Space and Time In 1990 John Perry Barlow, co-founder of the Electronic Frontier Foundation and lyricist for the Grateful Dead, first used William Gibson’s science fiction term “cyberspace” to refer to the place that it presently describes. Until Barlow named it, cyberspace it had not been considered any sort of place (Barlow, 2002). GVTs, particularly those that never meet face-to-face, operate exclusively in cyberspace. In contrast, collocated teams operate in “meatspace,” or the physical world where meat lives – as opposed to cyberspace and virtual communities, where meat communicates but does not live. The ability to work in cyberspace yields one of the most significant advantages for using GVTs – the possibility of assigning the most talented staff to a team no matter where its members are located. The tethers of physical space are transcended. Other benefits include reduction in development time and cost and time to market as well as closer integration with customers (Carmel, 1999). These advantages combine to yield “follow the sun” work, in which the output of some
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GVT members is passed from East to West to other GVT members such that work can be performed around the clock as the sun shines and the Earth rotates. Such non-stop work can dramatically decrease product development time and cost and time to market. This effort requires effective management of time zone differences. Leaders of GVTs must learn to lead 24/7. Some GVT members are ignorant of the impact of time zone differences. A senior Indian software manager relays the following experience concerning a collaborator working at his firm’s American headquarters: I got one email saying: I’m going to lunch now – could you give me an answer by the time I get back from lunch? It was after midnight here and I am not sitting by the computer! (Carmel, 1999, p. 163).
Time and distance constrain all human activities. GVT members face the limits of time and space early in the team’s lifespan and grapple with them daily in their efforts to collaborate (McGrath, 1990, 1991; McGrath & Hollingshead, 1994). Problems facing the team become more difficult to address with greater distance and time separating team members. A sales manager for a petrochemical company in our sample captures this observation well: Work overload, inadequate resources. We are too isolated, spread so far apart. We feel very alone. People aren’t ready yet to work at home, especially in the East. They are used to working with one another. Every one of us needs to adjust.
When working virtually, distance amplifies dysfunction. Teams that are collocated can more easily recognize and remedy problems, especially interpersonal problems that emerge. Teams that work at a distance, however, have fewer opportunities to recognize problems and have available less optimal methods to solve problems once they are identified. Because almost all communication is conducted at a distance rather than face-to-face, misunderstandings are more likely. Moreover, email is the communication medium of choice for GVTs because it can quickly convey messages across distance and time. Yet email is limited in its ability to convey complex or emotional messages, which are likely to accompany problem solving or cultural misunderstandings (Duarte & Snyder, 1999). Moreover, it requires greater skill to use email to foster trust or repair trust once it has been damaged. Trust is an important requirement of success when working virtually (Handy, 1995). By definition, time and space separate members of GVTs. Like change, this separation provides both opportunity and danger. Leaders must take advantage of the opportunity to select the most talented members of their team regardless of location. At the same time, leaders must prevent dysfunction that results from working at a distance. Leaders must learn to lead in cyberspace (see Table 1).
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Table 1. Leadership in Global Virtual Teams. Leadership Focus
Leadership Behaviors
Space and Time
• Learn to lead in cyberspace • Consider time zones and national holidays when scheduling teleconferences
Multiple Levels Organizational
• Provide strategic direction and focus • Set and align goals with strategy • Provide supportive organization context for global virtual teams • Facilitate interdependence and integration with rest of organization • Align performance measurement and reward systems • Provide and align information system infrastructure • Ensure successful early experience with new technologies
Team
• Lead team as a whole • Set and align goals with strategy • Clarify roles and expectations and make interdependent • Lead through teamwork • Lead through team collaboration technologies
Dyad
• Relationship between leader (formal or informal) and followers • Develop effective relationships with all team members, not just in group members
Individual
• Individuals as leaders and followers • Team members internalize goals and norms and use self-management practices to lead selves • Team members lead one another and the team according to situation demands
Full Range of Leadership Laissez-faire
• Fail to take action when necessary; absence of leadership. • Universally ineffective – especially corrosive when working at a distance; out of sight is out of mind • Negative relationships with team outcomes
Transactional
• Exchange rewards for desired performance – balance of rewards for individual and team effort • Take corrective action when team members deviate from standards or goals – should be limited because this can be seen as meddling if team is self-managing • Universally effective, particularly contingent reward • Positive but weaker relationships with team outcomes than transformational leadership
Transformational
• Idealized influence (attributed and behavioral charisma) – frequently cited as important
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Table 1. (Continued ) Leadership Focus
Leadership Behaviors • Inspirational motivation – may be cultural differences in reaction to this; Asian managers expressed less preference than western managers • Intellectual stimulation – essential for managing the innovativeness of GVTs; foster continuous learning and knowledge management • Individualized consideration – may be most related to satisfaction • Universally effective • Strongest relationships with team outcomes
Communication and Collaboration Technology Synchronous • Face-to-face meetings – essential, particularly when the team is established; used to set goals, clarify roles, build team, establish trust; rich medium; high social presence • Telephone – universal; cultural differences, e.g. Chinese managers prefer using telephone for activities for which U.S. and European managers prefer email • Teleconference – commonly used; ideal frequency is biweekly • Videoconference – seldom used; not worth cost and inconvenience; may be replaced by webcams used with personal computers if broadband access is available Asynchronous
Continuous Learning and Knowledge Management
• Fax – seldom used in GVTs, especially outside United States • Email – used most frequently; best when used to amplify transformational and transactional leadership; lean medium; low social presence • Voicemail – best when used to amplify transformational and transactional leadership; use in combination with email • Teamware/groupware – useful for structuring team activities but features often underused, e.g. most teams use only email function in Lotus Notes and ignore use of team collaboration tools • Intranet – internal web site maintained by team • Internet – web enabled team software; some difficulties with early adoption; difficult to use in nations with poor IT infrastructure • Emphasize team learning as well as individual learning • Seek constant improvement in team process • Use explicit approaches to knowledge management – electronic archives, data mining • Use tacit approaches to knowledge management – dialogue, stories, communities of practice • Provide training in virtual team process, managing cultural differences, team collaboration technologies • Capture and disseminate virtual team experience and knowledge
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Table 1. (Continued ) Leadership Focus
Leadership Behaviors
Team Life Cycle
• Use face-to-face meeting at start up and at critical transition periods • Develop swift trust • Take swift action to solve problems with team process
Culture
• Provides context in which GVTs and their organizations are embedded • Use organizational culture to weaken the influence of national culture and instill a third culture • Address cultural conflicts, particularly through use of interpersonal processes and learning from the experience of others • Recognize and manage manner in which culture interacts with features of leadership • Teams with members from many nations may take longer to become effective but they may be more creative
Leading Across Levels An understanding of organizations requires exploration of the various levels in which they operate (Klein & Kozlowski, 2000; Roberts, Hulin & Rousseau, 1978). Leadership may occur at multiple levels of analysis, although most models of leadership fail to reflect this complexity (Dansereau, Yammarino & Markman, 1995). A priori expectations of the level at which leadership is presumed to operate are sometimes not confirmed (e.g. Yammarino et al., 1998). When levels of analysis in leadership are explicitly considered in theory development, data collection and analysis, and interpretation of results, a more complete and accurate understanding of leadership is achieved. At least four levels of organization analysis are required to understand leadership in GVTs. These include: (1) organization level, especially the context in which the GVT is embedded; (2) the GVT itself; (3) the dyadic relationships among leaders and individual followers; and (4) individuals within the GVT. Influences at each of these levels of analysis interact with one another to shape GVT effectiveness. Organization Level. Leaders exert their most profound influence by creating organization structures and context to help the organization adapt to changing environments as well as to shape individual and team behavior. The most important activities for leading at the organizational level include establishing a strategic focus, setting and aligning goals at all levels with this strategic focus, aligning organizational systems to support one another, and creating an organization context that supports desired work innovations, such as GVTs (see Table 1).
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A supportive organizational culture and climate, compatability between innovation and users’ values, and the extent of top management support are essential for successful implementation of technological and management innovations (Klein, Buhl Conn & Sorra, 2001; Klein & Sorra, 1996). Top management support is often the most important predictor of successful use of work innovations. Our data show that GVT members who perceive strong support from top management are more likely to report that their GVTs are effective and to be more satisfied with and more committed to their teams. Moreover, team members who believe top management support is absent report lower effectiveness, satisfaction with and commitment to their GVT. Weak top management support makes it difficult for GVT leaders to motivate other team members. One GVT leader states, Many of them [top managers] are not supportive of global operations. It is very difficult to motivate staff to go on site at the same time the support process isn’t there.
Like all organization innovations, successful implementation of GVTs requires effective leadership and support from top management. Only top management can provide the proper strategic direction and change in organization structures and processes required to support GVTs. Moreover, the organization’s structures and processes must be aligned with one another to support this new form of work. Work innovations frequently fail when they are not supported by the organization structures and processes in which they are embedded (Heller, 1998; Lawler, 1992; Lawler, Mohrman & Benson, 2001; Macy & Izumi, 1993). Organizational factors that influence distributed work include planning, goalsetting, budgeting processes, performance measurement and reward systems, and information system infrastructure (Galbraith, 1994). Integration of these systems is required to align GVT activities that cut across functional, organizational and geographic boundaries (Cohen & Mankin, 1999; DeSanctis, Staudenmayer & Wong, 1999). Absence of such integration makes it difficult for GVT members to do their work. For example, goal setting and its application through management by objectives has a powerful impact on organizational outcomes (Rodgers & Hunter, 1991). Goal setting is powerful only when goals at all levels of the organization are aligned with goals set at the top. GVT goals must be aligned with goals set at higher levels in the organization that are, in turn, tied to the firm’s competitive strategy. Project management software, such as Primavera and Microsoft Project, provide powerful tools for managing the alignment of goals and tasks across all levels and functions in the organization. Our results support the importance of setting and monitoring goals and aligning team goals with goals set at higher levels in the organization. Teams that did these were most effective, satisfied and committed.
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A finance manager for the manufacturing division of a petrochemical company states, Each year the executive team establishes goals. Each group [team] in the company develops their own key business activities to support the top goals.
A leader of a human resources team for personal communications in the Asian Pacific division of an electronics corporation contends that goal clarity contributes most to the success of his GVT. [Goals provide] . . . objectives so they [team members] all know what we are working toward. It pulls us on track. The clearer it is the better it gets. That is top on the list. This is most important. It creates the existence of the team.
A project development manager indicates that his team is ineffective due to lack of organizational clarity. You get different signals, which makes it difficult to solve some issues. There is no clear alignment and it [project] is too big and complicated to survive without management involvement and support. You feel pulled in different directions.
GVTs in our study that are highly integrated with the surrounding organization display higher levels of team effectiveness, team satisfaction and team commitment. Similarly, teams that depend on other teams within the organization to achieve goals report higher levels of team effectiveness, team satisfaction and team commitment than those that exhibit limited interdependence. GVTs in our sample that balanced rewards for individual and team performance were more effective, satisfied and committed, but this balanced approach to administering rewards was rare. Even respondents that reported high levels of team effectiveness, satisfaction and commitment were more likely to be rewarded as individuals than as a team. One manager for a petrochemical corporation and GVT member stated, “Rewards are all [on an] individual [basis]. We should have team rewards and make them visible so the organization can see it.” Another manager stated, “Rewards should be linked to individual, team and company, but in a way they can see their contribution to the company.” Team Level. The GVT itself provides the second level of analysis required to understand leadership at a distance. Here we are concerned with how the team as a whole is led. Despite the enormous amount of research devoted to the study of leadership during the past fifty years, we know surprisingly little about how leaders create and lead effective teams (Zaccaro, Rittman & Marks, 2001). Research has tended instead to focus on how leaders lead individuals or groups without consideration of how the leader integrates individual efforts through the mediating influence of team processes. Although some models of team process acknowledge
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the importance of leadership, its treatment is often superficial and unconnected to common leadership theories. Several models of teamwork are available to help guide leadership (e.g. Dickinson & McIntyre, 1997; McIntyre & Salas, 1995). Traditionally, leadership theories have focused on leading individuals (Bass, 1990), although some have urged a focus on the team itself (Misumi & Peterson, 1985). Models of team leadership are now being developed (Yukl, 2002; Zaccaro et al., 2001; Zaccaro & Klimoski, 2002). Full Range Leadership Theory has also been extended to the team level (Sivasubramaniam, Murry, Avolio & Jung, 2002). We discuss this in more detail below. Dyadic Level. The dyadic relationship involving the leader and individual followers provides the third level of analysis. Emphasis on the leader-follower relationship is most associated with the LMX theory of George Graen and his colleagues. LMX theory has evolved through four different stages, starting with an exclusive focus on dyads and role development but evolving to develop a focus on team-making and assembly of dyads in its most recent version (Graen & Uhl-Bien, 1995). LMX theory is unique in its explicit consideration of the unfolding of time in the leadership and team-making process. Indicators of leader-member exchange in our sample were correlated with team effectiveness, satisfaction and commitment. Team members with more effective relationships with their formal leader reported greater team effectiveness, satisfaction and commitment. Individual Level. Three aspects of the individual level of analysis are important. First, most theories of leadership emphasize individuals as leaders and followers. Influence originates in an individual (leader) and is directed to another individual (follower). Second, individuals may lead themselves. This is a unique form of distributed leadership in which individuals internalize goals and norms and use self-management practices to organize their work and guide their team contributions. Third, peers may shape the performance of one another as well as the team. In this case, leadership power and functions are distributed among all members of the GVT. Leadership by team members varies across situations. All of these aspects of the individual level of analysis are important in GVTs. Leaders may distribute leadership to all members of the team. That is, individuals learn to lead other team members as well as themselves by setting their own goals, planning and implementing their own task procedures, being self-observant and self-critical, solving their own problems, and being motivated by natural rewards associated with their work (Manz & Sims, 2001). A manager working on a human resources management team and member of a GVT for a petrochemical company states that self-leadership is crucial to the success or failure of virtual teams.
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[There should be] no hierarchy. The leader should leave room to resolve issues and use the strengths and weaknesses of the team in an open way. The leader should create an environment where people don’t try to defend their own territory. [Team members] need to be able to feel free to take action. You can’t have competition in a virtual team because people won’t see everything that you do. The leader should create space for the minority view, but this is harder to do in virtual teams.
A global team leader for internal communications judges his superior’s leadership style to be ineffective because She doesn’t know what is going on with people personally. Her job isn’t defined well and she tends to meddle. She isn’t a skilled communicator. She makes decisions that override those of the team.
Teams in our sample with formal leaders who discouraged self-leadership typically reported lower effectiveness. By contrast, managers often reported that their teams were more effective when leadership varied with situational demands. That is, different team members step forward to exert leadership when the situation favors their special skills or experience. Moreover, they said that this often varies with personality, national origin and ability to speak English. For example, some team members are risk averse and reluctant to step forward and lead. Australians were said to be more likely to lead themselves than were Japanese. Those with poor English skills are less likely to exert leadership. We discuss the impact of national culture on leadership in more detail later. Leadership must start at the organizational level. Organizational practices and systems, such as goals and rewards, must be aligned to support working virtually. Leadership must be distributed away from those with formal positions of authority to all members of the virtual team. Team members must learn to lead themselves as well as one another. Leadership should adapt to meet the changing demands faced by the team.
Leading Through the Full Range of Leadership Leadership is most irresistible when it ignites the passion of others. Full Range Leadership Theory (FRLT) is one of the most popular theories of leadership that reveals the power of passion (Bass, 1985, 1998; Bass & Avolio, 1994, 1997). FRLT considers three styles of leadership influence (Table 1). The first style, laissez-faire leadership, is actually the absence of leadership. That is, the leader fails to take necessary action. The second style, transactional leadership, consists of two components: (1) use of rewards that are provided in exchange for desired behavior; (2) management by exception (active and passive), in which leaders
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take action only when subordinate behavior deviates from standards or pursuit of desired goals. The third style, transformational leadership, consists of four components: (1) idealized influence (attributed and behavioral charisma) – the leader emphasizes values and develops trust; (2) inspirational motivation – the leader articulates an appealing vision of the future and uses this to challenge followers to pursue high standards; (3) intellectual stimulation – the leader urges followers to question traditions and substitute new beliefs and practices; (4) individualized consideration – the leader acknowledges individual needs, abilities and aspirations and helps followers to achieve these. Transformational leadership is most effective when it encourages team rather than individual performance (Avolio & Bass, 1995; Klein & House, 1995). Individual team members may react differently, however, to their leader’s transformational leadership (Yammarino & Bass, 1990; Yammarino, Spangler & Dubinsky, 1998). Transactional leaders enter into an exchange with followers by identifying goals and relevant contingencies, and rewarding followers for goal achievement and punishing followers for failure to achieve goals – the carrot and stick approach to leadership. This is the style of leadership most frequently emphasized in organizations. In contrast, transformational leaders motivate followers to transcend self-interest for the good of the team or organization, that is, to work beyond expectations. In this manner, transformational leadership builds upon transactional leadership. Moreover, transformational leadership augments outcomes achieved with transactional leadership. Both transactional and transformational leadership are important. Transactional leaders work well within the constraints of organizations, whereas transformational leaders change the organization (Bass, 1985). Bass (1997) reports that the laissez-faire style of leadership is perceived around the world to be ineffective. He reports further that transactional – especially the contingent reward component – and transformational styles are universally effective, leading to improved performance, satisfaction and commitment to the team and organization. Moreover, the augmentation effect of transformational leadership appears to be universal. Studies of the universality of preferred leadership traits and behaviors provide independent support for the cross-cultural importance of elements of transformational leadership, in particular charisma (Den Hartog, House, Hanges, Ruiz-Quintinilla, Dorfman & GLOBE, 1999). We created indicators of FRLT based on verbal reports. We found that transformational leaders were able to extend their reach across distance and time. We discovered significant relationships between most elements of transformational leadership and self-reported team effectiveness and commitment; however, only individualized influence was related to team satisfaction. Transactional leadership behaviors showed relatively smaller effects on team outcomes compared with transformational leadership behaviors. Contingent reward was related to team
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effectiveness and commitment. Laissez-faire, or “hands off” leadership, was negatively related to team effectiveness and commitment. Team effectiveness and commitment were most consistently related to components in the model. Hierarchical multiple regression analysis failed to support an augmentation effect of transformational leadership over and above the influence of both transactional and laissez-faire forms of leadership. This failure was likely due to the small size of our sample and its limited power as well as limited reliability due to use of single item indicators. Our respondents often expressed a desire for leaders to lead both the head and the heart. One manager, director of commercial support services for the Asian Pacific region of a computer company, identifies the complex needs of effective virtual team leadership. We see in this description many of the elements of transformational and transactional leadership: The leader must be clear about the team’s mission and values and articulate them consistently. The leader must be able to walk the talk, not be political, and make people really feel that they are an asset. [Effective leaders] don’t just review the numbers. They reinforce business. The virtual leader has to be good at managing the strengths and weaknesses of team members. A leader is not selfish. He recognizes his own limitations. The leader has to have character to be able to work across cultures; he has to develop feeling and appreciation for each culture. A good leader can steer business and push for results, yet can be very caring for staff. This may be a tough balance. The leader must consistently manage head and heart.
Another manager who is head of a global supply and logistics team for a petrochemical company further emphasizes the importance of leading through intellect and emotion: To get the hearts and minds [of followers], you have to convince people that the cause is worthwhile. People want to do well. You get them involved by showing how they can help the cause. In the old way they want to see their own versions of how to do well; they don’t see how their efforts align with the enterprise. Leaders should show interest in their work, engage with them in problem solving initiatives. You have to go to their world. Be consistent in what you say. Credibility is important. Trust is very important.
A human resources director for an electronics company and leader of a GVT emphasizes the need for integrity: Leader integrity is important. You must set certain ground rules – no surprises, deliver what you promise, continuous improvement. A fundamental part of his leadership strategy is to learn about the team members as individuals as well as their families. He strives to understand their whole self.
One manager working with the Asian division of global information services for a petrochemical company underscores the importance of trust in GVTs in facilitating member autonomy.
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The very first thing is trust. In virtual teaming you have to trust your staff because of distance and time. You can’t control [the team] like in a face-to-face environment. You must clarify roles and responsibilities up front. Tell them to imagine that this is their own company.
Our quantitative and qualitative data provide support for the extension of FRLT to global virtual teams. Transformational and transactional leadership appear to be effective when leading from a distance. Laissez-faire leadership is rendered even less effective when the leader is afar.
Leading Through Technology All leaders use communications technology to exercise their influence. In collocated teams, leaders most frequently use face-to-face contact, humankind’s oldest form of communication technology. Face-to-face contact is particularly useful for developing relationships with others because it allows detection of facial expressions and other forms of nonverbal communication which display underlying emotional states. Facial expressions are universal in their interpretation, which makes personal contact important for cross-cultural interaction (Matsumoto, 2000). GVTs, because of separation in distance and time, provide only limited opportunities for face-to-face contact. Face-to-face meetings, when they do occur, help to establish a deep rhythm for communication within the team that shapes later success (Maznevski & Chudoba, 2000). The rarity of face-to-face contact increases the importance of each meeting. As a consequence, leaders of GVTs must pay greater attention to the timing, content, and structure of face-to-face meetings, which we discuss later in more detail. Moreover, GVT leaders, far more than leaders of collocated teams, must rely on collaboration and communication technologies to exert power and influence and to instill trust in GVTs (Jarvenpaa & Leidner, 1998). Communication may be either synchronous (at the same time) or asynchronous (at different times). Face-to-face meetings and telephone calls allow synchronous communication (see Table 1). Voicemail and email allow asynchronous communication. Both forms of communication are important in GVTs, although asynchronous communication is used more frequently because of the flexibility that it provides. GVTs integrate efforts of individual members primarily through use of information technology (IT). IT tools that may enable and amplify leadership include: email, message boards, groupware and other group support systems such as Lotus Notes (www.lotus.com), ISDN video-conferencing, Internet-based collaborative
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tools such as NetMeeting (www.microsoft.com/windows/netmeeting) and LiveLink (www.opentext.com/livelink), instant messaging, virtual meeting rooms such as eRoom (www.eroom.com), application sharing, centralized document storage management, and so forth. Simpler technologies, such as telephone and voicemail, are also used to enhance leadership influence. Members of GVTs must be able to match the appropriate technology with its use and then be able to use it effectively (Lengel & Daft, 1988; Townsend, DeMarie & Hendrickson, 1998). Strategy and desire for media richness or social presence may be used to guide choice of technology. Technology may be matched to strategic requirements of efficiency, responsiveness and learning (Boudreau, Loch, Robey & Straud, 1998). Technologies that link together suppliers and customers, such as electronic data exchange systems and the Internet, can enhance efficiency and responsiveness. Technologies that link employees with each other, such as groupware and intranets, may enhance innovation and organizational learning. Senior management teams are most responsible for ensuring the match between IT and strategy. Senior managers are also responsible for acting as role models for the proper use of technology to strengthen leadership. Technology may also be chosen based on the “richness” of its information carrying capacity (Daft & Lengel, 1984, 1986). Oral and synchronous media are richer than written and asynchronous media. Face-to-face meetings are “rich” because they allow transmission of complex social and psychological information. Electronic media are “lean” because they are less able to convey complex social and psychological information. Richer media should be used for equivocal communication tasks where subjective views are exchanged to define and solve problems, resolve disagreements, enhance shared understanding, and reach agreement concerning desired courses of action (Daft et al., 1987). Information richness theory allows predictions about how managers will perceive and use different communication media and provides prescriptions for the proper choice of communication media. Although some research demonstrates that matching the proper medium to its use increases performance (Daft, Lengel & Trevino, 1987), the social processes surrounding use of the media may be more important (Markus, 1994). Social presence is the degree to which technology facilitates interpersonal connection and development of interpersonal relationships, that is, facilitates transmission of cues for attentiveness, warmth, emotion, and understanding (Short, Williams & Christie, 1976). This need is reflected in Handy’s belief that “trust needs touch” (1995, p. 46). Routine situations and problems, such as the exchange of descriptive information, require less social presence. Ambiguous and nonroutine situations and problems, such as those dealing with cultural misunderstandings
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and conflict, require more social presence. Synchronous communications provide more social presence. Asynchronous communications provide less social presence. Leaders and other members of GVTs must use asynchronous communication media that are lean and have less social presence because of the distance in time and space that separates them, yet they must be able to convey cues for attentiveness, warmth, emotion, and understanding in order to establish trust and strengthen interpersonal relationships. With some exceptions (Avolio, Kahai & Dodge, 2001; Avolio, Kahai, Dumdum & Sivasubramianiam, 2001), few researchers have considered the manner in which IT may enable leadership and team performance. IT is linked to leadership in two ways. Leaders shape how successfully followers are able to use technology. For example, leaders who fail to provide structure and training for email behavior decrease the chance that team members will use email effectively in the future. As a result, team performance may be reduced. Second, IT constrains leadership by limiting influence. Less optimal use of IT reduces the leader’s impact on others. Adaptive structuration theory (DeSanctis & Poole, 1994; Poole & DeSanctis, 1990) explains how this occurs. DeSanctis and Poole (1994) state that a dialectical relationship exists between elements of the organization context, such as organization structure and leadership, and adoption and implementation of technology, such as IT. Organization context shapes creation, development, adoption, and implementation of new forms of technology (Van de Ven, Angle & Poole, 1989). New technologies, in turn, shape organization context (Markus & Robey, 1988). Some aspects of the organization are determined by the technology, some aspects of the technology are changed to fit organizational characteristics, and yet other aspects of change are unpredictable, suggesting an interactive deterministic relationship between technology and organization (Majchrzak & Davis, 1990). Over time, both organization and technology co-evolve in predictable and unpredictable ways. Although information richness theory provides prescriptions for choice of communication media, as discussed before, little research is available to show how IT choices influence leadership effectiveness. The effectiveness of team-enabling technologies such as group support systems (GSSs) has been examined, but these systems have been studied primarily with students in the laboratory rather than with practicing managers in the field (Fjermestad & Hiltz, 1998–1999; Hollingshead & McGrath, 1995). The results of this research are mixed and offer only limited guidance to leaders. In general, teams adopt and use IT in team-specific ways, not all of which take optimal advantage of the technology’s features. Top management is in a position to oversee the fit between IT and organizational initiatives and strategy. This is why we emphasized before that senior leaders need to pay attention to the implementation of GVTs.
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We examined the following technologies used by GVT members to communicate with one another: voicemail, fax, groupware, teleconferencing, videoconferencing, webcams, and personal computer-enabled and Internet-enabled collaboration software. We found that, quite often, less is more. That is, the most effective teams used fewer technologies but deployed them skillfully. Videoconferencing was rarely used because it was not convenient and was not believed to be sufficiently better than other media. Some teams were experimenting with personal computer-based webcams, but this was rare. Email and teleconference calls were most used. We found a curvilinear relationship between frequency of using teleconference calls and team outcomes. Effective teams used teleconference calls on a biweekly basis. More frequent teleconference calls, for example weekly, and less frequent teleconference calls, for example monthly, were employed by less effective teams. There may be two explanations for this curvilinear relationship. First, ineffective teams may communicate more often to try to resolve difficulties because they are struggling together. Second, infrequent communication may indicate laissez-faire leadership on the part of the team leader. Manner of technology deployment is also important. Voicemail was used in two ways. The first and more limited use involved merely leaving a message to return the unanswered call. A second and more powerful use of voicemail was to try to compensate for difference in time zones. Instructions, monitoring and follow-up, as well as congratulatory messages were left by leaders during non-work time of followers. Voicemail was also used to direct attention to email messages to reduce the chance of their being ignored, a common problem for the senior managers in our study who reported getting more than one hundred email messages per day. The telephone was used more than email to build and strengthen interpersonal relationships, a usage pattern that is common for senior managers (Markus, 1994). Asian managers in our sample more often reported preference for the telephone to build and strengthen relationships. Most GVTs in our sample use voice messaging, email, and teleconference calls as primary methods of communicating with other team members. Quality of email use, for example, prompt and polite responses, was significantly correlated with team satisfaction, but had a weaker relationship with team effectiveness and team commitment. A vice president in our sample cites clarity and promptness as advantages of email. He notes that it is “almost discussional in nature – you can get opinions and views. It is almost like a chat room, but may be more effective because of time zones.” A human resources manager identified a major disadvantage of relying on email as the primary means of communicating with team members. “With email, you get a lot of miscommunication because of the way people express themselves and how others interpret the message, especially the tone, from the way it was
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worded.” This miscommunication is due to limited information richness and low social presence in e-mail. Leaders must be sensitive to the fact that any synchronous form of communication, such as a telephone call, teleconference call, or videoconference call, will inconvenience some team members. This will always be true for GVTs that have members in Asia, Europe, and North America because these regions span all world time zones. Over time, lack of sensitivity to the scheduling of conference calls can decrease attention to the message being conveyed, reduce support for the leader, and erode satisfaction and commitment to the team. Several members of our sample reported that they do not participate in regular team teleconference calls because these are repeatedly scheduled at inconvenient times (e.g. midnight or later in Asia). They either refuse to join the call, or, if given no choice, they engage in other activities during the call. Insensitivity to scheduling of teleconference calls has continued despite complaints from these team members to their leader. The result has been reduced satisfaction with the leader and reduced commitment to the team’s activities. A simple solution is to rotate times for calls so that all team members may share the inconvenience. While the use of technology may be an efficient, cost-effective way of leading GVTs, it cannot replace regular face-to-face meetings. GVT members and leaders repeatedly discussed the value of such meetings. Face-to-face meetings allow team members to develop interpersonal relationships, thus fostering trust within the team. As one manager commented, Without having face-to-face meetings it is very difficult to trust each other. You don’t easily get this from telephone, email, or videoconference. You get it from face-to-face meetings. You get this from informal activities, not formal activities. People believe you more than just from what you write.
Face-to-face meetings are particularly important at the team’s inception and during critical disruptive points in the team’s work (see Gersick, 1988). Initial face-to-face meetings may aid in aligning members’ expectations and goals. These meetings also provide an important opportunity for the leader to express a vision for the team and employ charisma to create excitement and commitment to the vision. A manager of a customer services team states, “The first face-to-face meeting is critically important to get [the team] to work. You need to get a feel for the team members and what they are like.” Our data indicate that teams that use face-to-face meetings are more effective than teams that never meet together. Moreover, those that spend time on relationship building during these meetings demonstrate higher levels of team commitment. Most relationship-building exercises are conducted “off the clock” (following the accomplishment of the day’s tasks), and are unstructured (e.g. sharing dinner at the
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end of the day). A vice president at a petrochemical company states that relationship building is done “with dinners and social events. In our three-day meetings, 10–20% of the time is spent on relationship building.” A manager of commercial support services for the Asian Pacific region of a computer company describes a more ambitious program of relationship building in his virtual team: Once a year, we go offsite to do some activity. We engage consultants in team building to structure activities with intended purposes such as obstacle courses and archery sessions. These activities drive home lessons about teamwork. These are done at least half a day, sometimes a full day depending on the activity. We pay top dollar to outside agencies. These [relationshipbuilding exercises] are very important. You can’t take teamwork for granted; it is not a family business. These people get sought from other companies. You can’t just talk about business.
Relationship-building activities tend to decline with the tenure of the team and as team members become better acquainted with each other. One vice-president points out, “We did team building in the beginning, but now the focus is on work. We develop relationships while doing work rather than engaging in a separate activity [devoted to that purpose].” Finally, leaders must pay attention to implementation of new technology. Numerous respondents in one of the organizations in our sample who were early adopters of Live Link, an Internet-based collaboration tool, experienced difficulty with using the software and, as a result, discontinued its use and were negatively disposed to trying it again. This is important because a small “window of opportunity” exists during the early adaptation of new technologies (Tyre & Orlikowski, 1994). Once this time passes and the window closes, the manner in which the technology is used (or not used) becomes congealed and difficult to change at a later time. It is difficult later to sweeten bitter early experiences with new technology. This is important for top leaders who deploy IT to implement strategy – early dissatisfaction with new technologies may retard subsequent deployment. This fact provides an important leverage point for those trying to lead at a distance. Leaders must ensure successful early experiences with new technologies used to enable GVT performance. This is an important reason why leaders must be trained first and become adept at using technology themselves so that they can provide the necessary guidance and proper role model for those who follow them. Moreover, leaders can help to instill norms regarding technology usage during the early life of the GVT. Use of norms in this manner is a potent leadership tool available to GVTs (Kiely, 2001). Leaders of GVTs must compensate for the dysfunctions of distance through proper use of communication and collaboration technologies. This means more than merely sending email. Leaders must learn instead how to use technologies such as email to amplify their impact. Moreover, leaders must use the proper
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mix of technologies by considering the need for information richness and social presence. Finally, leaders must pay attention to the implementation of technology. Technology implementation is too important to relegate to IT professionals.
Leading Continuous Learning and Knowledge Management Teams that emphasize continuous learning and improvement perform better over time (Swezey & Salas, 1992). Team learning, more than individual learning, is important because team performance is more than the sum of individual performance. Flight crews and surgical teams – virtual teams because of their temporariness – perform better when team members are trained to work together as a team rather than as individuals (Salas, Bowers & Edens, 2001). Learning becomes continuous when teams seek constant improvement in team process. Learning is an ongoing process, which is a responsibility for each team member as well as the team itself (see Table 1). Knowledge management is an effort by the team to grow, organize and share intellectual capital as well as to foster norms for continuous learning. Intellectual capital is the sum of information, knowledge, experience, and understanding of each team member and the team itself. It is also the result of the team learning about itself. Simple practices such as post-meeting reviews of team process can aid continuous team learning and can help to manage team knowledge. Knowledge management may be either explicit or tacit (Daft, 2001). Explicit approaches employ high-quality, reliable and fast storage, access and retrieval of codified, reusable knowledge. Information technology is typically used to create data warehouses and electronic libraries. Tacit approaches channel individual expertise to specific others to share creative insight on pressing problems. People use interpersonal networks and communities of practice to communicate through dialogue, use of stories and shared experience. Continuous learning can be a focus of intellectual stimulation – one of the components of transformational leadership – that emphasizes challenging old methods of working and developing new ways of seeing problems. Senior leaders can install the technologies needed to create data warehouses and electronic libraries. Moreover, they can ensure that organizational members from around the globe have access to stored knowledge by networking together disparate computer systems. GVT leaders can ensure that knowledge within the team is managed. This can be done both electronically and interpersonally. Electronic archives are used in over half of teams in our sample that are identified as highly effective, highly satisfied, and highly committed. Electronic archives commonly include shared servers or Internet sites.
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Training is an important component of continuous learning. Yet, only about onefifth of the teams in our study received team training of any kind. Teams in our study that received training did not judge it to be effective for working virtually. Few received training in use of IT, and, if training was received, it focused on simple use of technology features rather than on how to use the technology to work effectively as a team. Few teams received any training in managing cultural differences. No one received training devoted to working virtually. Lack of training was a common lament. Many respondents expressed a strong desire to receive more training to prepare them to work on virtual teams. One GVT member stated, “No training. [I’ve been] looking for it.” Moreover, training that was frequently provided was only technical in nature, rather than focused on interpersonal and social issues important for team process. One GVT member said, “All training is technical, not on soft issues.” Managers in our study frequently spoke of their need for training and assistance to help them to work virtually. Their organizations failed to provide such assistance. Organizations in our study also failed to capture the experience of their GVTs and to learn from it. The consequence of this oversight is continued duplication throughout the organization of the steep, fault-lined learning curve associated with working virtually. Like Sisyphus, the ancient Corinthian king who angered the gods in Greek mythology, each GVT rolls the rock of its experience up the hill, only to fall to the bottom as it approaches the top. Each new GVT must then climb anew.
Leading Through the Life Cycle Teams have a life cycle of growth with identifiable stages and predictable opportunities and challenges at each stage (Gersick, 1988, 1989; Tuckman, 1965). Leadership demands change as the GVT moves through its life cycle – from start-up to performing the work to product or outcome delivery – with different challenges at each stage of growth (see Table 1). Difficulties at each stage of growth in GVTs are magnified because virtual teams are often temporary and because of the separation of their members in space and time. Mistakes are more easily made. It is more difficult to detect and correct mistakes after they are made. Different GVTs have different life cycles. Some teams are short-lived, with a clear beginning and ending point, for example, project teams. The ability to rapidly create, deploy and disband teams provides one of the most important sources of flexibility for GVTs. Such temporary teams must act quickly to establish “swift trust” and enact team processes (Meyerson, Weick & Kramer, 1996). Other teams are ongoing. For ongoing teams, membership may be stable or unstable, where members may rotate on and off the team over time. On going teams can take
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longer to establish trust and enact team processes. The nature of the task typically determines the lifespan of the team, although this is, in part, a human resource strategic decision. When tasks are complex, teams are likely to have more stable membership than when tasks are less complex (Bell & Kozlowski, 2002). The dynamic tension that permeates team growth and change during its life cycle results from natural stress periods associated with positive and negative feedback from the team’s environment (Senge, 1990). Positive feedback produces growth and expansion of change. Negative feedback slows growth and change. Teams go through alternating periods of stability punctuated by change. Most teams in our sample have worked together for two years or less. These include the least effective, least satisfied and least committed teams. This suggests that GVTs struggle to establish themselves. Three of the least effective teams have worked together for three years or more, suggesting poor oversight and weak learning and knowledge management. Leadership across space and time is enabled through recognition of the stages of GVT growth and the opportunities and challenges that each stage provides. Attention during each stage must be focused on task achievement and team development as well as proper use of IT and other communication media, such as face-to-face meetings. Most importantly, leadership must continue unabated over time. One GVT leader in our sample states, “The leader is the person who pulls everything together and keeps people on track. He has the history of the team. Members change. The leader must educate new members.” Leaders of GVTs can never go off the clock.
Leading through Culture Culture is the final element in our model. Because culture provides an embedding context for GVTs, it permeates all aspects of leadership and teams (see Fig. 1). To start, GVTs are multicultural because they include members from more than one nation. National identity is correlated with receptiveness to late-night teleconference calls, willingness to telework from home and actively participate in meetings, as well as other factors. Cultural heterogeneity can influence team performance because individual team members bring with them beliefs, attitudes, values, and other characteristics that form their social identity (Taijfel & Turner, 1986) and because individuals influence team performance (Salk & Brannen, 2000). House, Wright and Aditya (1997) describe how national culture, leadership, and organization context interact to influence leader effectiveness. Culturally common experiences involving history, religion and so forth yield “psychological commonalities” that include assumptions, values, beliefs, attitudes, and expectations
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Fig. 1. Model of Leadership in Global Virtual Teams.
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concerning the behavior of others. Psychological commonalities endorsed by members of the same culture shape development of shared meaning concerning desired leadership attributes and behaviors (leader prototypes), and organizational practices as well as implicit theories of leadership and organizing. Implicit theories determine whether leadership and organization behaviors are favored or disfavored within cultures. Leaders are effective and more readily accepted when they enact favored leadership behaviors. The question that arises with respect to GVTs is: When the team consists of members from multiple cultures, to which cultural prototype should leaders try to match their behavior? The answer to this question lies, at least in part, with the organization in which teams are embedded. Strong organizational cultures can moderate the influence of national culture by producing a hybrid “third culture” that may include norms and values from multiple cultures, and in which the shared purpose and experience provided by organization membership helps to weaken the influence of national origin (Casmir, 1992; Graen, Hui, Wakabayashi & Wang, 1997). Where strong organizational cultures exist, team members to a large degree check their national and cultural identity at the door when they go to work and instead adhere to the third culture of the organization. Many managers in our sample, when asked about the influence of cultural differences, stated that identification with their organization’s culture suppressed influence of their national culture. They also stated, however, that cultural differences nevertheless influenced the manner in which GVT members worked with one another. A financial controller for a computer company and member of a GVT observes that in his organization: You have the same company culture . . . It includes trust and openness and working together for common goals and [common] good . . . [The company’s] guiding principles allow people to build the culture [of the GVT]. The founders were seen as decent people who took care of employees and contributed to employees. People have continuously created this environment. The company culture provides a foundation for national culture.
Culture influences team process and team performance, but the manner in which this occurs is unknown. Research in this area is scarce; models describing culture’s potential impact are only now being developed (Davis, 1999; Davis & Kuang, 2000; Earley & Gibson, 2002; Helmreich & Merritt, 1998). Culture influences GVTs through the values and beliefs that shape the actions of GVT members, which in turn influence their acceptance of, comfort with, and effective use of this form of innovative work design. Culture also influences GVTs through language. Since English is the primary language used in the companies in our sample, GVT members with limited proficiency in English have greater difficulty expressing themselves and influencing others.
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Cultural differences sometimes lead to conflicts in teams. Cultural conflicts among GVT members in our study were associated with reduced team effectiveness, team satisfaction, and team commitment, although these differences only approached statistical significance. Effective teams emphasized interpersonal processes and learning from the experience of others to resolve cultural conflicts. These practices, in addition to training in cultural differences, also enhanced team satisfaction and commitment. In addition to its direct influence, culture interacts with the features of GVT leadership discussed above. Culture interacts with leadership style, technology, growth and change, perceptions of space and time, and learning and knowledge management. Culture Interacts with Leadership Style. Culture shapes how leaders lead and how others react to their leadership (Smith & Peterson, 1988). Although transactional and transformational leadership are universally effective, and laissez-faire leadership is universally ineffective, culture shapes the manner in which each is enacted. A member of a global pricing team that operates virtually notes cultural differences in leadership styles: You never see an Asian follow up in a personal way. This is done by Europeans, Americans and Australians. Asians tend to be more impersonal. [This manager’s recommendations for effective leadership include] rallying passion among the team [members], encouraging views so that they still feel like they are part of the team while working remotely. It is better to involve people’s passions. If you can get them to encourage themselves, then half the work is done.
Culture Interacts with Acceptance and Use of Communication Media and Technologies. Cultural variability exists in the manner in which computermediated-communication influences decision-making (El-Shinnawy & Vinze, 1997), usage of email between knowledge workers (Straub, 1994) and acceptance and use of information technology (Straub, Loch & Hill, 2001). Helmreich and his colleagues (Helmreich & Merritt, 1998; Merritt & Helmreich, 1996) have reported cultural variation in reliance upon technologies, such as flight computers and autopilots. Members of some nations rely on technology when they should not; members of other nations fail to rely on technology when they should. Several managers in our study stated that culture also predisposes choice of IT. Western managers are more likely to use email for messages for which Asian managers are more likely to prefer telephone calls. In other words, there is a difference in whether the message is viewed as the simple conveyance of information or instead an opportunity to develop or strengthen relationships. Many of the respondents in our sample cited cultural differences in communication style during face-to-face meetings. One GVT leader stated,
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The Dutch are very raw. English always have to be questioned two or three times to know what they are saying. In big meetings, Asians and Europeans don’t speak up like the U.S. They don’t want to stand up and say how they feel . . . All of this discussion is to improve buy-in. In Asia, they don’t worry about buy-in. In Asia you just follow authority . . . If the boss says it, you just do it.
It is obvious that these perceptions represent stereotypes to some degree. Nevertheless, beliefs such as these guide the manner in which GVT members perceive one another and react to their behavior. Culture Interacts with Growth and Change in the Team. GVTs that consist of members from few or many cultural groups may outperform those with members from the same cultural group, but this outcome may take longer to achieve and may change over time. Culturally homogeneous teams may demonstrate superior performance and interaction process during the early stages of team formation. Over time, however, culturally heterogeneous teams match the interaction process of homogenous groups and may exceed them in providing creative solutions to problems (Watson, Kumar & Michaelsen, 1993). Earley and Mosakowski (2000) show that cultural heterogeneity may have a U-shaped relationship with team performance over time. Teams that are only moderately heterogeneous in culture, that is, with membership evenly split between two cultures, perform more poorly than culturally homogeneous teams, that is, all team members share the same nationality, or teams that are highly heterogeneous in national membership, that is, team members come from at least three different nationalities. Culture Interacts with Time and Space. People from different cultures experience time differently. Entire societies may be characterized by a modal perspective on time that influences cultural values such as emphasis on short-term or long-term goals and the importance of completing tasks before deadlines (Doob, 1971; Kluckhohn & Strodtbeck, 1961). Different conceptions of time that vary across cultures, and that may influence organization behavior, include whether time is believed to be real or epiphenomenal, objective or subjective, novel or cyclical, discrete or continuous, and whether it emphasizes past, present or future (Mosakowski & Earley, 2000). Trompenaars and Hampden-Turner (1998, p. 127) tell of a South Korean manager who expressed shock and disappointment when he entered his boss’s office in the Netherlands. His Dutch boss was on the telephone and “rudely” continued his phone conversation rather than immediately and enthusiastically greeting his Korean visitor. The notion of sequencing emotions and postponing them until after the task is complete is viewed as rude and suggests insincerity to one who expects immediate acknowledgement of emotion and simultaneous action. Culture Interacts with Learning and Knowledge Management. Reaction to training content and methods as well as the purpose that training serves varies
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across cultures. Americans, for example, prefer training that is practical and concrete, while Europeans prefer training that is more conceptual with practical applications (Schneider & Barsoux, 1999). For Japanese, the aim of training is more to create a lasting bond between employees and the company than to impart specific skills (Harris & Moran, 1991).
SUMMARY AND CONCLUSIONS We created a model to depict the leadership process in GVTs (see Fig. 1). Like Dorfman (2003), we believe leadership is embedded within national culture. Cultural characteristics influence acceptance of and ability to work in teams, whether virtual or collocated. Cultural values influence development and acceptance of leadership prototypes. GVTs are also embedded in organization context. Organization context includes organization culture, functional groups comprising GVTs and their associated professional values, and top management support. Organizational culture provides the context for supporting – or failing to support – the technologically-enabled communication and collaboration required to make GVTs effective. Members of different functional groups share different professional values, which in turn influence interpersonal relationship development and working with others (Lawrence & Lorsch, 1969). Top managers must provide organizational resources and remove organizational barriers to enable electronic forms of collaboration. Leadership characteristics include matching the leadership style and behaviors that represent the prototype of effective leadership. We emphasized above behaviors associated with transformational and transactional leadership and leader-member exchange. Substitutes for leadership, for example, technology used to enforce work pacing and provide task feedback, are likely to be important as well, especially in combination with leadership behaviors (Podsakoff & MacKenzie, 1995). Leaders exert their influence through the mediating variables of communication and collaboration technologies, for example use of email and groupware, and team process, for example, monitoring others and providing feedback to them. Mediating variables influence follower behaviors, in particular proper use of IT and contributions to team performance. The model we propose is dynamic. It recognizes that leadership and teamwork unfold over time and the team’s life cycle. Leadership action must be calibrated with stages in GVT development. In the early stages of GVT formation, transformational behaviors, especially sharing a vision of the team’s mission, are most important. Individualized consideration should help to build swift trust.
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Intellectual stimulation should encourage GVT members to become open to the unique demands of working virtually, to learn from this experience, and to disseminate this knowledge throughout the organization. As the team matures and enters the mid-stage of completing and integrating its work assignments, transactional behaviors, such as monitoring and providing corrective feedback, should become more salient. Finally, as the team’s product or outcome is delivered, team learning and experiences should be assembled into best practices and archived and shared with other GVTs. Throughout the team’s life cycle, contingent reward in the form of positive feedback enhances motivation to perform. A senior manager for a finance and administration department of a computer company and member of a GVT summarizes those qualities that make virtual teams successful: The principles of virtual teams – the first is respect. You need to show it for individuals. Next is communication. You establish trust by meeting people and working through things. Establish an infrastructure to support GVTs using technology. Leaders need to set expectations regarding self-management and perceptions of others (that they are sharing the same experiences with you). Leaders need to be able to share vision and direction so that everyone realizes that you have some common goals and plans to share and review the linkages. Finally, reward people. Virtual teams require different approaches and you need to reward them [the people] for doing them.
Rapid change has prompted organizations to explore innovative forms of work design to enhance flexibility and adaptability. The industrial age required workers to leave the farm and move to cities to work in factories and offices. Workers followed the work. In today’s post-industrial age, information technologies bring work to workers. This trend will create new relationships between workers and the organizations that employ them. Not surprisingly for an applied area of study, practicing managers are ahead of researchers in focusing on the challenges of these new forms of work. Managers have organized virtual teams without regard to how to lead them effectively. Only now is research catching up to practice. Leadership scholars are up to this challenge. The field of leadership research has never been more robust. Current theories of culture and leadership, and methods for analyzing data that capture organizational complexity at multiple levels of analysis, will help us to identify what is required to lead effectively at a distance.
ACKNOWLEDGMENTS We thank Michael Mihalecz, Ying Liu, Lara Tedrow, Kari Strobel, Rebecca Say, and Nancy Emery for their help in data coding and analysis. We are grateful to Bill
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Mobley and Peter Dorfman for their comments on an earlier draft of this chapter. We also thank the managers and their assistants in our study for sharing their time and experiences with us and for helping us to make many, often complex, travel and interview arrangements. Parts of this work were previously presented at meetings of the PDI Global Research Consortia in Penang, Malaysia (October, 2000); Tokyo, Japan (March, 2001); London, England (May, 2001); Beijing, China (October, 2001); Seoul, Korea (October, 2002), and the International Telework Association and Council, St. Louis, United States (September, 2000). The PDI Global Research Consortia sponsored this research. Conclusions and opinions expressed are those of the authors and not necessarily those of the sponsor. Work on this chapter was also supported by grants to the first author from the U.S. National Aeronautics and Space Administration and the U.S. National Science Foundation, and a Space Grant Fellowship to the second author from the U.S. National Aeronautics and Space Administration.
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DEVELOPING GLOBAL MANAGERS: INTEGRATING THEORY, BEHAVIOR, DATA AND PERFORMANCE Joseph J. DiStefano and Martha L. Maznevski ABSTRACT This chapter addresses the challenge of designing and executing educational curricula to develop global leaders, especially focusing on how they work with and influence people. Today’s global managers are expected to master an ever-expanding range of knowledge and skills, and educators are faced with the challenge of preparing them to be as effective as possible. We argue that educators must combine multiple methods carefully to achieve their objective. The chapter illustrates how to mix concepts, data, projects and behavioral exercises to help global managers develop team and leadership skills. The processes we outline are designed for students in undergraduate, MBA and Executive programs.
INTRODUCTION The skills and knowledge requirements for managers working in companies with international activities have increased dramatically as the twin forces of globalization and technological innovations have changed business realities. Even in the late 1980s, as the use of the adjective “global” started appearing in articles in the business press, it was clear that additional abilities and information would Advances in Global Leadership Advances in Global Leadership, Volume 3, 341–371 Copyright © 2003 by Elsevier Science Ltd. All rights of reproduction in any form reserved ISSN: 1535-1203/PII: S1535120302030162
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be needed to ensure global managers’ success. A literature review at that time summarized the capabilities that global managers needed: global strategic skills, managing change and transition, managing cultural diversity, designing and functioning in flexible organizational structures, working with others and teams, communicating, learning and transferring knowledge in complex organizations (Lane & DiStefano, 1992, pp. 50–59). The list has grown even longer in recent years as the demands of global jobs have increased in complexity. Volumes 1 and 2 of Advances in Global Leadership and a number of recent publications have described global leadership requirements and ways to develop them. The range of topics deemed important has grown wider, too, as the following sampling of titles (Mendenhall et al., 2001, pp. v–vi) reveals: International Assignments and Careers as Repositories of Knowledge The Effects of International Human Resource Management Strategies on Global Leadership Development Global Leadership: Women Leaders Synergy Effects in Multinational Work Groups: What We Know and What We Don’t Know Using Assessment Centers as Tools for Global Leadership Development Strategic Repatriation Policies to Enhance Global Leadership Development These examples provide an idea of both what is needed and the variety of ways of addressing the new requirements. More specifically, Black, Morrison and Gregersen (1999) identify common characteristics of global leaders across Asia, Europe and North America. In their research, the list of key qualities include a high degree of inquisitiveness, personal character emphasizing emotional connection and integrity, duality (capacity for managing uncertainty and ability to balance tensions) and business and organizational savvy. A large majority of the responding companies on three continents said that there were significant shortfalls in both the number of globally-competent people available and the skills that those available possessed. Their list both overlaps and extends the work of Kealey (1990), which is based on a study of over 1,300 expatriates, and identifies successful performance as associated with adaptation, expertise and interactive skills. Even within the various business functions, books on the global aspects of various specializations are now common. For example, marketing, human resource management and women managers all have their equivalent global texts (Jeannet, 2000; Evans et al., 2001; Adler & Izraeli, 1994; respectively). Not to be outdone in the globalization rush, academic journals, too, are devoting issues to the theme. See, for example, the special issues of Human Resource Management Journal on global leadership (Gregersen et al., 2000).
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In short, there are two compounding factors at work: (1) globalization means that more people and jobs have significant international demands; and (2) the demands themselves are becoming increasingly complex. A third complicating factor is the increased degree of flux: not only are the challenges more complex, they are continually changing. In just a few months the global economy experienced unprecedented, enormous changes in market value of companies, and the pervasive influence of large events such as 9/11 and the collapse of Enron. The challenge for HR professionals, training and development specialists and academics is to help prepare more managers, more thoroughly, for these demands.
Different Contributions from Academics and Practitioners The challenges of meeting the needs for global managers call for different inputs from practicing managers and academics. In the organizations themselves, different types of managers can provide critical information. For example, line managers can help define the content of the development agenda based on their international experience. Top management can clarify the importance of global knowledge and skills, and can create organizational structures and processes to advance globalization in their own firms. Global managers can coach their potential successors, thereby expanding the pool available for global jobs. HR managers can help identify candidates for these jobs earlier and can improve systems for recruiting and selecting, and for managing expatriation and repatriation. Indeed all traditional HR roles become more complex when global requirements are added. This is especially true for HR departments’ training and development activities. The role of business academics, as we aim to demonstrate in this chapter, is to synthesize ideas and help managers apply the synthesis. To accomplish this, academics must take the material and experiences from managers and hold them up against a background of previous research and findings. In this way, scholars identify the patterns associated with long-term effectiveness, and also create processes by which managers can develop the important skills and conceptual knowledge. Academics must work with managers and listen carefully to their ideas, but they must also step back from the subjective nature of the managers’ experiences, discern more objective generalizations that are often counter-intuitive, and, through rigorous research, develop knowledge that managers need but do not already have. Business academics must also seek to discover the most effective ways of helping global managers develop new skills, rather than relying on traditional methods that may be less effective in the complex context. Both the content and processes provided by academics in any educational program must reflect the complex realities of the global manager’s role, and a
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synthesis of the managers’ and the academics’ contributions. Of equal importance is motivating managers to actually apply what they learn. Therefore, program designs – the focus of the balance of this chapter – must be multidimensional and integrated in order to be effective. We begin our sojourn into program development by introducing two case studies which we will follow throughout the chapter. We then turn to the big picture – overall objectives and design principles – before addressing more detailed execution of the sequence of a program. We conclude with some reflections on the importance of integrating components of a program, both with each other and with the real-life context for learners.
Two Case Studies We will follow two cases throughout the chapter, illustrating each aspect of the design in the two situations. MBA Course The first case is an elective course in the second year of an MBA program at a North American university. It was scheduled as twenty 80-minute sessions over a period of ten weeks. The 53 participants in this course had worked full time between three and six years. They had completed required courses on the core business functions, including organizational behavior, strategy and international business. They generally enrolled in the course with an interest in global leadership and international management. About one third had significant international experience, but less than a tenth had substantive international business experience (almost all of these were exchange students from other countries). Company Program The second case is a module on global leadership in an executive education program for senior managers of a global manufacturing company. The program consisted of two five-day sessions three months apart, with collaborative project work conducted between the sessions. The global leadership module was allocated three days of the program – two in the first session and one in the second. The company had been formed recently from a difficult merger between subsidiaries of two firms from different countries, then the subsequent acquisition of a third. The program brought together managers from each of the formerly separate entities from around the world to learn together about leading the company. The thirty participants had worked full-time for 15 to 25 years, and most had engineering or other science backgrounds. They were skeptical of their peers from other parts of
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the organization, but recognized that unless they worked together the company’s overall performance was in jeopardy. These two cases represent very different types of educational situations: they occupy almost opposite poles in terms of participants’ experiences and motivational context, and the application context of the curricula. We will show how we adapted the same objectives and principles to these different cases, laying the foundation for readers to generalize to many other situations.
THE BIG PICTURE: EXACTLY WHAT IS THE PROGRAM ABOUT? Setting the Objectives Program planning begins by identifying the most important objectives. For a program to serve the development of global leaders in the intimidating world we have described, the overall goals must be: providing general models that can apply to many situations; bringing together conceptual and behavioral skills; developing the ability to conceptualize as a skill in itself (important in a changing world where the models and frameworks need to be adapted when they become obsolete); developing the ability to behave thoughtfully and to reflect on behavior, in order to adapt behavior as well as ideas in a changing world. These general objectives should be tailored to the specific group, but all should be incorporated into a module or program to at least some extent. In the MBA course, for example, we wanted the participants to develop familiarity with the most commonly-used frameworks and general models in the literature so they would be prepared for a wide variety of situations and share a language with others who have been similarly prepared. Given participants’ limited international experiences, another objective was to expose them to a broad spectrum of typical situations; the ability to conceptualize was incorporated into this by helping participants learn to generalize across the situations. Thoughtful behavior, reflection and adaptation were addressed by incorporating behavioral exercises of increasing complexity throughout the course, with frequent reflections on how each exercise was both similar to and different from previous ones. In the company program our aim was to help them interpret and behave effectively in their own particular situation. This meant developing depth of thinking and application around the specific frameworks and models that applied
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particularly to their own situation, rather than breadth around many ideas. The participants had extensive experience but had reflected on the technical aspects of their jobs more than the interpersonal ones. Since the interpersonal aspects are critical to global leadership, we focused on developing conceptual skills around interpersonal relationships. Thoughtful behavior, reflection and adaptation were developed by integrating the global leadership discussions with projects and assignments conducted for other aspects of the program, and reflecting on behavioral developments between the sessions.
ORGANIZING PRINCIPLE To address multiple objectives in a program that aims to develop global leaders in a complex environment, an overall organizing principle is critical. An organizing principle is an overall framework or model that pulls together the broad set of material and concepts important to global leadership, and articulates their relationship with performance and effectiveness. Many organizing principles can be used to frame the curriculum, including a situational leadership or team model. For example, House’s path-goal leadership model focuses on characteristics of the followers, the task and the context as contingencies to identify the most appropriate leadership style (House, 1971). A curriculum with this model as an organizing principle could have sections identifying important dimensions about each of followers (such as personality, culture, professional experience), the task (perhaps ambiguity and interdependence), and the context (for example, organizational or national culture). It would also examine different leadership styles, and discuss cases and situations illustrating the contingency relationships with performance. The organizing principle we find most useful when working in global companies and with global teams is the Map-Bridge-Integrate (MBI) model we developed in our research on multicultural teams in global settings (DiStefano & Maznevski, 2000; Maznevski & DiStefano, 2000). Figure 1 summarizes the MBI model. According to our findings, teams that engage in all three sets of behaviors effectively perform beyond expectations. Leaders who facilitate the three sets of behaviors – whether in a team, a broader network or an entire workforce – achieve superior performance in their units, and the effect is stronger the more complex the management situation. The mapping activity is the basis for conceptualizing the key dimensions of the situations global leaders face and understanding their underlying patterns. The bridging function provides effective methods for communicating across the differences described by mapping. The integrating activities help manage
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Fig. 1. The Map-Bridge-Integrate Model.
the differences in order to obtain higher performance. Taken together, the MBI elements guide both conceptualization and action, thus providing the basis for the application of ideas to improve performance in the face of complexity and change. In the MBA elective, we used the MBI model to structure each of three broad segments of the course: interpersonal effectiveness, executing strategy and corporate social responsibility (Lane et al., 2000). In the first segment, we focused on the implications of cultural and other differences on interpersonal communication and conflict resolution. In the segment on executing strategy, we worked through initiatives such as change management, knowledge transfer and new product development following the organizing principle. When we examined corporate social responsibility, ethical, legal and political issues around the world became the center of attention, and Map-Bridge-Integrate was used as a principle to understand the challenges and develop creative solutions for them. In the company program, on the other hand, we applied the MBI organizing principle only to a very narrow range of interpersonal effectiveness and strategy execution situations. We highlighted merger challenges and corporate turnarounds to provide a context for the importance of interpersonal effectiveness, and used their own examples extensively to develop the skills within the MBI set of principles.
SEQUENCING THE SESSIONS Every development program requires both an opening and closing transition: the former brings people from their everyday situations into the learning environment, while the latter helps them transfer what they have learned and adapt it to their own
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situations. Between these two transitions are the sessions guided by the organizing principle. In our programs we begin with an initial orientation, and follow with sessions on Mapping, Bridging and Integrating, and close with a commitment to specific actions.
THE FIRST TRANSITION: INITIAL ORIENTATION The initial orientation should accomplish two objectives. It should set up a structure to elicit the type of social interactions that provide the best possible learning, and it should build sufficient trust so that participants may be open in addressing issues raised throughout the curriculum and associated activities. Program activities should reflect the multicultural realities faced by global managers, so an ideal participant group has as much cultural diversity as possible. Our best experiences in university contexts have been when the class makeup was half “domestic” students and half international exchange students.1 If we have data on other dimensions, such as MBTI profiles, we consider these variables as well, but only after participants are well distributed by cultural background. We then structure student project teams to reflect the diversity of the class. In the MBA program described above, we had fewer students with international experience, but almost two-thirds of the domestic students had recent ethnic origins from outside North America so we used original ethnic background as a criterion for group composition. In international executive programs, diversity of culture, business unit and specialty is typically already built into the distribution of team members assigned by the HR professionals, but it is useful to double-check. If the teams in executive programs are formed for purposes dictated by company requirements, such as special projects associated with the program, we try to influence the makeup in advance to ensure appropriate distribution of characteristics relevant to the tasks. In the Company Program described here, the company wanted teams of six to address five different specific strategic issues. They wanted some members of each team to have professional expertise in the area, but not everyone. We requested that they also distribute members by country and culture, so the resulting teams were very diverse. Diversity is a double-edged sword – associated with potential for high performance – but often leading to lower performance. It is important to set up the conditions under which trust can be developed by facilitating social cohesion both within the teams and across the entire participant group. For student groups we often invite intact teams to our homes for a social event such as a barbeque, preferably early in the course. In the MBA course, we ran a three-hour (including debrief) behavioral simulation during the second week. This exercise, called
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BaF´a-BaF´a, simulates two cultures in an intensive setting and requires that participants move between the cultures, creating deeply-felt emotions and all the cognitive processes associated with cross-cultural interaction (Shirts, 1977).2 With careful debriefing around the impact of culture on perceptions, evaluations and action, it set a strong foundation for the content of the rest of the course. But at least as importantly, it created a lot of laughter and stories, which formed a basis for shared experiences and trust over the following weeks.3 With executive teams who do not already know each other, we plan ice-breaking activities and encourage the participants to share some personal information during introductions and in participant information booklets. In addition, social activities such as cross-cultural dinners help participants get to know each other better, especially if they have the opportunity to describe their own cultural traditions. Inviting managers to exchange small gifts representing some aspect of their cultures also builds cohesion, while simultaneously imparting information about the different cultures represented in the group. Simply providing time in the schedule for teams to work together and socialize allows for further conversation. In the manufacturing company’s program, most participants knew each other by sight, but not well. During the opening dinner and orientation, we engaged in an icebreaker which required them to work together around a fun task. While they were still laughing, we paired each person with someone she didn’t know, and asked the pairs to interview each other regarding personal and work-related background. Interesting stories from these interviews were shared with everyone (identifying the wine expert, the father of twins, and the expat who was in his fifth country assignment), creating the right environment for learning about global leadership. The role of the professor or facilitator is critical in the initial transition. Without active intervention, students and participants tend to talk to people they know or can relate to easily, and discuss topics about which they all share the same perspective. The professor can – and should – help move these relationships and conversations into less-familiar territory. Self-disclosure is, in itself, subject to varying cultural norms, and leaders should be careful not to push beyond those norms, especially at the beginning. However, by recognizing the opportunities that arise spontaneously in discussions and events, professors can actively improve the levels of trust. Once the initial orientation is completed, we turn from the first transition to our MBI organizing principles that constitute the focus of our development work.
MAPPING In mapping, we provide theories, concepts and models global leaders can apply to the situations they find themselves in. Mapping is not just learning to apply a
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particular framework, it’s about frameworking. It is about learning to use conceptual frameworks, assessing their usefulness, applying them to the “detective work” of analysis, and understanding their usefulness. Mapping should help managers see patterns, to make sense of differences, to explain past behavior and to predict future behavior.
Mapping Culture There is an inherent paradox in the choice of concepts and models used for mapping. It is easier to apply frameworks if the phenomenon being explained is something the manager knows well, yet mapping itself is part of the process of developing a deeper understanding of the phenomenon, recognizing that there are aspects one does not know well. In both the MBA Course and the Company Program, as in almost all of our teaching on global leadership, we focused specifically on mapping culture. While other differences and frameworks – such as personality, cognitive styles and gender – are also illuminating in global leadership, we have found that mapping culture provides the best learning for two reasons. First, although it is obvious to most global managers that culture influences how people work in multinational settings, the specific effects of culture are deeply buried and little understood. A formal learning situation, such as an MBA course or a company program, is one of the few situations in which the phenomenon can be adequately explored. Second, again because the effects of culture are deeply buried, we find that cultural differences present both the greatest barriers to performance and the greatest opportunities to innovation in multicultural settings. If global leaders can learn to manage and leverage cultural differences, the extension to other characteristics such as professional or personality differences is relatively easy. The concepts of culture we find most useful for global leadership are drawn from cultural anthropology, particularly from the work of Kluckhohn and Strodtbeck (1961). Based on a content analysis of hundreds of ethnographic studies, these scholars developed a universal list of six basic questions that each culture must answer, with a limited set of possible answers for each question. Each culture’s basic underlying assumptions can be described as a configuration of answers to these questions. The six questions are:
What is our basic relationship to each other? What is our basic relationship with the world around us? How do we engage in activity? What is the basic nature of humans?
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How do we think about time? How do we think about space? A summary of this framework is illustrated in Table 1.
Preparation Prior to doing any reading or thinking about culture, we ask participants to complete the Cultural Perspectives Questionnaire (CPQ), which measures their own cultural values within these dimensions (Maznevski et al., 2002). The results of the CPQ provide each participant an individual profile and also show the range of scores within the group. The group-level feedback forms for the MBA group and the Company Program are shown in Figs. 2 and 3, respectively. After they have completed the questionnaire, we ask participants to read about the cultural concepts. We assigned the MBA students a comprehensive reading on the culture framework with extensive examples and explanations (Lane et al., 2000, pp. 19–50). This audience had less experience with culture and were becoming prepared for a wider range of situations than the company managers were, so a longer, more detailed reading was appropriate. We assigned the company program a short summary of the culture framework (Maznevski & DiStefano, 2002). The Class Sequence In the mapping part of the class, we try to intersperse knowledge transfer and practice extensively. We keep the transfer of explicit knowledge (e.g. “here’s the concept”) as short as possible and apply the knowledge extensively to illustrate and analyze cases and personal examples. In the MBA program, we began with a newspaper article about a manager going from North America to East Asia, and dealing with cultural difficulties there. This introductory case presented specific issues that could be expanded upon, but also surfaced the notions of needing to understand how cultures are different, not just that they are different. Then we introduced the concept of culture, and began describing the conceptual framework and providing feedback and other cases. In the company program, we began by giving the executives three one-paragraph scenarios to respond to: one about self-managed teams, one addressing a shortfall in sales, and one dealing with scheduling a calendar. In each case, executives were asked how they typically expect themselves and others to prioritize responses or
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Table 1. Cultural Orientations in Organizations. Issue Relation to Environment
Variations Subjugation
Harmony
Mastery
• Acknowledges constraints • Accepts external controls • Accepts some things can’t change
• Takes holistic view • Maintains balance • Implements synergistic approaches
• Controls events & situation • Makes things happen • Initiates change
Past • Respects tradition and proven ways • Decides based on precedence • Maintains continuity
Present • Addresses current issues
Future • Plans longer term
• Plans for near term
• Anticipates change
• Responds to change
• Sees implications of present on future
Monochronic • Attends to clocks, calendars, deadlines; be punctual • Acts on things one at a time and in sequence • Views time as linear
Polychronic • Is flexible and relaxed about schedules
Human Nature
Bad • Mistrusts initially • Supervises closely • Explains good behavior as the exception
Blank Slate (Neutral) • Explains behavior in situ • Trusts based on real experience
Good • Trusts initially • Shares information, empowers others • Explains bad behavior as the exception
Activity
Being • Is spontaneous • Acts on feelings • Emphasizes life • Works to live
Thinking • Thinks before acting • Balances work and leisure • Controls impulses
Doing • Strives to achieve • Acts to accomplish • Emphasizes performance • Lives to work
Relationships
Hierarchical • Attends to vertical relations • Respects authority • Gives status and by age and seniority
Collective • Attends to lateral relations
Individual • Attends to own welfare
• Preserves interests of the group (even over own)
• Expects others to protect their own interests • Values equality
Public • Uses open offices • Shares information and resources • Accepts close physical proximity
Mixed • Has private and public areas for use • Maintains moderate physical distance
Private • Prefers privacy of office & information • Maintains physical distance
Time Orientation
Single vs. Multiple Activities
Space
• Does things simultaneously • Does things in parallel
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Fig. 2. Cultural Perspectives Questionnaire Results MB Program.
actions. The scenarios correspond with the cultural dimensions of relationships among people, relationship to the environment and activity, respectively. The scenarios were appropriate for the executives since they brought enough experience to the table for the situations to be typical – everyone could share stories about “when that happened in my business unit . . .” In both programs, once we began the discussion of the conceptual framework we interspersed knowledge, feedback and short cases and examples. We began by explaining the concept of Relation to Environment, and gave real examples from business situations illustrating harmony, mastery and subjugation. We then had participants provide some of their own examples. Next we turned to the case (for the MBA students) or the scenario (for the executives), and identified which aspects of the environment were highlighted.
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Fig. 3. Cultural Perspectives Questionnaire Results Company Program.
Finally, we provided individualized feedback on the dimension. Each person received his or her own scores, and the group discussed the implications of the ranges of scores and made predictions about the relative scores of other groups with which they were familiar. We also linked the scores to the cases and examples already discussed.
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The iterative process was repeated for each of the dimensions, as long as there was time and/or until the group generally developed a propensity to engage in mapping. With the MBA group, we went through the whole framework. With each successive dimension, the students became more adept at interpreting scores, suggesting implications and analyzing situations with respect to the dimension. To prepare for the session immediately after discussion of the framework, we asked them to fill their backpacks and pockets with “typical American stuff.” During class, we had them dump their bags and pocket contents onto tables, then sort through the materials as an anthropologist would. The goal was to categorize American culture according to the cultural dimensions using the artifacts. Of course, the students quickly discovered that any artifact – such as a credit card or a baseball cap – could represent any number of dimensions, and its correct interpretation depended on knowing something about how it was used within the culture. This provided a good lesson about mapping cultures: the importance of asking questions and looking at networks of meaning in new places. We also coached the MBAs to use the framework throughout the course as a first cut at any case or situation, asking the same questions of cultural insiders that they had asked of themselves during the American culture exercise. By the end of the course they interpreted new cross-cultural situations very fluently and moved quickly to deeper insights and applications. With the company group we only went through two dimensions – Relation to Environment and Relationship among People – with any detail before moving to illustrating the concepts in cases and experiences. We followed the same sequence, but also linked the individualized feedback to people’s responses to the scenarios. Using this mechanism, we connected the generic scenario events to real events in the life of the company’s acquisitions, resulting in some spirited and healthy discussion around cultural norms and clashes during the initial stages of integration. For example, managers from one business unit were lower on hierarchy and higher on collectivism than those from other units (as shown both in the scenario responses and their individualized feedback), and the group recalled that this business unit had resisted the acquisition much more than others. The managers from the business unit in question thought that the acquiring company had imposed roles and hierarchy in inappropriate ways, and wanted more discussion and dialogue around the new structures. In the context of cultural mapping, these arguments were seen as having roots in different cultural perspectives, each with its own internal logic and validity. Anger dissipated, and was replaced with curiosity about what could have happened with better understanding at the time. To help executives generalize across situations, we have developed some short cases that can be interspersed with the feedback of data. Those that have passed the acid test of executive use include Johannes van den Bosch Sends an E-mail
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(DiStefano, 2001a), Johannes van den Bosch Receives a Reply (DiStefano, 2001b) and Gold Star Properties Financial Crisis (DiStefano, 2002). The Importance of Measurement in Mapping It is worth noting here the importance of such quantitative results in intensifying participants’ understanding, and in helping to enhance mapping skills. There are several reasons why measurement is important. For student groups, measurement often eliminates skepticism about whether cultural differences are real or important. They view evidence of significant differences. This is also useful for executive groups who think their strong corporate cultures overwhelm ethnic or national differences. The breadth of range in the various measures usually captures their attention. For executives who are used to quantitative evidence, providing solid measurements increases credibility and gives them a way of entering into dialogue about abstract concepts. They develop a language to which they can attribute specific characteristics, and move quite quickly and adeptly from there to applying the concepts in different contexts. As important as cultural understanding and sensitivity are for global managers, there are other differences that are important to map and understand. In both the MBA course and the company program, we made reference to mapping cognitive differences with the Myers-Briggs Type Indicator® (1986), gender differences (e.g. Tannen, 1994), other professional differences (e.g. engineers, accountants and marketers), and personality differences using the Leadership Development Report (Hagberg & Jackson, 1993), which is largely based on Jackson’s Personality Research Form (Jackson, 1964, 1974, 1984, 1997). These kinds of differences can be mapped in the same way as culture can, and may be even more important for domestic teams. This knowledge, observation and practice from the Cultural Perspectives Questionnaire feedback and various cases and scenarios is a key aspect of cultural mapping, and provides a strong foundation for the first part of the MBI model of effectiveness. After the model’s mapping portion is addressed, other elements of the MBI model are introduced. As in the case of mapping, the bridging and integrating components feature a variety of methodologies (simulations, exercises, cases, quantitative data and participant examples) to further integrate theory and behavior.
BRIDGING Although we use many cases in the mapping phase of a program that foreshadow bridging (allowing us to refer back to them later), once the mapping goals have been
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addressed we turn fully to bridging. The “Bridging” elements of the MBI model provide the means for communicating effectively across differences. They are: Preparing – examining your motivations for communicating and your confidence that you can improve. Decentering – adapting listening and speaking to take into account the differences between you and others; and suppressing the tendency to blame others for the misunderstandings. Recentering – finding common ground for establishing communications; and establishing an agreed-upon set of norms for communicating and integrating. These elements of bridging incorporate conceptual and behavioral skills, and build on the fundamental understandings of differences derived from the mapping activity. To learn to bridge, participants need to practice. The practice is most fruitful if structured in situations where participants know differences exist, know what these differences are, and can witness improvements in communication when they take the differences into account. There are a number of activities that meet these criteria. One of our favorites for introducing bridging is a Lego® exercise using blindfolds, which requires only about 45 minutes including the debriefing. We divide the group into pairs with one person in each pair volunteering to be blindfolded, and the two members sitting across from each other at a table. The sighted person then guides the blindfolded person in the replication of a small model from a Lego® set. The sighted person cannot touch the pieces, nor touch the blinded person’s hands. The differences that must be bridged are fairly clear: the blindfolded person cannot see where the pieces are, the plan for what is being built, or colors, while the sighted person can see all those things. In addition, “left” and “right” are reversed for the two as they are sitting across the table from each other. The criterion for effective communication is obvious: when the model matches the picture exactly, the pair has achieved its goal. A quick discussion highlights the elements of bridging that were necessary for effective communication and how they played out in the pairs. Pairs inevitably develop different ways of engaging in bridging. For example, in the executive program, some pairs built motivation and confidence by recalling previous situations in which they had worked together, others built by joking with and praising each other, and still others by establishing a structured and formal working style that the pair believed would lead to the right outcomes. Comparing these different styles provides powerful lessons in bridging: preparing, decentering and recentering are all critical, and there are many ways to accomplish each. The exercise also allows for exploration of some important dynamics around collaboration that foreshadow integrating. In some interactions, both the coach and
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the builder help prepare, decenter and recenter, establishing a mutual dependence. In these pairs, the model is built in a reasonable amount of time by a builder who understood the process as it went along, and both the coach and the builder emerge from the experience very satisfied and more motivated and confident about such situations. In most cases, though, both members of the pair assume that the communication is primarily one way, with the blindfolded person listening and depending on the sighted coach. These pairs usually either take longer to construct the model (“It was hard to find the words to explain to my builder exactly which pieces to use when”), or, if they construct it quickly, the builder does not feel an important part of the process and often has no idea what is really going on (“When I was building, I just listened hard and did whatever he told me to as fast as I could!”). These pairs end with the coach feeling triumphant and relieved and the builder feeling simply relieved and sometimes satisfied at having pleased the coach. This is not a bad outcome for the activity (bridging is still effective), but in the parallel of cross-cultural leadership it is usually less desirable than the first outcome. Exploring this dynamic helps participants see that each party must try to assume the other’s perspective, and the more the blindfolded builder plays an active role in the process, the more interdependence is built. The building exercise is active and engaging, and increases communication skills in a concrete way. Both the members of the MBA class and the executive program thoroughly enjoyed it, and could easily relate it to their experiences. For the MBAs, it reminded them of experiences with customers and executives outside their own business unit, and they saw how they could have built mutual dependence and bridging more effectively. For the executives, it helped them draw lessons from expatriate experiences in communication across cultural boundaries. After participants grow more confident and competent in communicating during a simple exercise, we then apply the same bridging concepts and behaviors to more complicated situations of daily business realities. Cases and role-playing are especially appropriate for this purpose. There are many possible resources to use, and an important criterion for decision-making is the context of the participants. One pair of cases that we find particularly effective are Bob Chen and David Shorter (DiStefano & Abramson, 1991), and we used these with the MBA course. The cases deal with communication gaps between a Hong Kong Chinese expatriate accountant and his Canadian accounting and tax partners, and the escalated outcomes of those gaps. The two cases describe the same events over a two-year period, as perceived by the different parties. The events show the complexity of cultural differences in the workplace. The immediate conflict in the case is not cultural, per se, and participants working on the case often argue that this is therefore not a case about culture. But it becomes very clear in the role-play and subsequent discussion that cultural differences played a strong role
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in the misinterpretation and escalation of the conflict. Furthermore, an effective resolution of the conflict requires taking cultural differences into account, bridging carefully. In the role play, David Shorter (the partner in charge) and Bob Chen (the accountant) try to reconcile the differences, and all of the elements of mapping and bridging are fully engaged. After a pair of participants role-played the final meeting, we debriefed the role-play and the differences in the perspectives. Then we had another pair of participants role-play the meeting again, this time taking into account an understanding of the two sides and the cultural and non-cultural issues involved. This opportunity to get feedback and then try again is available only in such learning settings, and should be fully exploited. In the executive program we selected the case Blue Ridge Spain (McNett, Athanassiou, Lane & Wesley, 2000) to use for bridging and role-play. This case has been written specifically for a role-play and is especially interesting to managers because it describes the intent to dismantle a joint venture (j.v.) by the U.S.-based dissatisfied party. The original U.S. side of the j.v. participation had been bought out by another U.S. multinational with different strategy and international experience and a different business portfolio, adding to the complexity and realism of the j.v. history and dynamics. The case also contains sufficient financial information for the negotiations to be more realistic than many cases.4 There are ethical, crosscultural, strategic and tactical issues involved in deciding what to do and how to do it. We assist the mapping of relevant cultures by inclusion of information about the key players (Spanish, Greek, American and Finnish) as part of the preparation. Despite the exposure to the MBI model, and their own cultural data, which includes information about the range of differences in the group of executives participating in the role-play and discussions, the role-plays often focus so heavily on financial analysis and negotiating tactics designed to produce a win-lose outcome, that very little time is spent in preparing to deal with the important differences in culture and in j.v. objectives and structure. The strong motivation to “win” often overwhelms any initiative to take the j.v. partner’s point of view (decentering), and the only common ground sought tends to be financial. Thus, the outcomes often parallel the real situation in which the U.S. partner assumes that they have achieved victory at the end of the negotiation, only to find in the debriefing that they had been blinded to the longer run consequences of their negotiating strategy and become big losers in the Spanish market. The lessons about the advantages of being more thorough in mapping differences and being more motivated to fully understand the others’ perspectives are strongly reinforced during the debriefing of the role-play. A re-analysis of the case history after the role-play usually reveals that the common ground between the partners (the re-centering part of bridging in the MBI model) depended heavily on the Greek regional manager for Europe. This key link between the partners had been marginalized during the buyout of the original U.S. partner.
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To make matters worse, his original boss had been replaced after the buyout by a particularly insensitive executive, who had little experience in the Blue Ridge part of the industry or region. The experience of the case discussion, role-play and debriefing illustrates the usefulness of the MBI model and provides a highly memorably experience, adding to the development of even seasoned global executives. The key to maximizing the impact of any of these activities – the blindfold exercise, the case role-play exercises, and other bridging activities – is high quality debriefing after the experience. Drawing out the generalizations that can be extended to other situations is crucial to going beyond the particular exercise. Movement from concrete incidents to more abstract generalizations uses and increases conceptualization skills. The mapping results, the three bridging components and the MBI model are useful tools and concepts to use in the debriefing.
Bridging over Technology Communications and information technology have clearly changed the way people communicate and work together globally. Email, net meetings, telephone and video conferencing, web casts and shared directories on intranets have all become part of the global managers’ standard repertoire. These technologies will be relied upon increasingly as the world becomes even more connected. By bringing together people who cannot meet in person on a regular basis, communications and information technologies create a tremendous opportunity for global managers and their companies. However, like all other elements of globalization, realizing that potential is another story. Because working virtually is in many ways different from working face-to-face, it is important to begin incorporating these tools into management development. Technology creates particular challenges for bridging by imposing barriers to deep communication and relationship-building. To overcome these communication barriers team processes must be careful and explicit, the portfolio of technology should be used effectively and there should be a heartbeat, or rhythm, of rich communication (Maznevski & Chudoba, 2000). If virtual communication is a particular challenge for a group of participants, we try to incorporate a skill-building exercise in which participants work with others to complete a task over communications technology. The task can be as simple as a case report, or as complex as a multidimensional project. We did not incorporate a virtual task into either of the cases we are illustrating here. In other MBA courses, though, we have joined together with colleagues at other institutions to have the students collaborate across institutions on projects. This provides an intensive and fascinating learning experience for everyone
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involved, even when difficulties of logistics are taken into account. Participants almost always learn – to their surprise, but not ours – much more about the process of working together over technology in complex situations than they do about the topic of their project itself, and these lessons transfer directly to the workplace. In other executive courses we have used a standard team task and divided team members across study rooms, restricting their interaction to communication using the computer and telephone. As with the role-plays and cases described, careful debrief is the key to facilitating the right learning points here.
INTEGRATING The key activities in the integration component of the MBI model involve: Encouraging participation: monitoring participation rates, involving low participators, establishing routines to facilitate broad participation and varying the modes of participation (written, oral, private, in meetings, prior or post-meeting inputs, etc.). Resolving conflicts: detecting conflicts (especially when subtly or indirectly expressed), using bridging techniques to resolve conflicts, anticipating conflicts and agreeing on ways to avoid the destructive aspects of conflicts. Building on ideas: treating ideas as starting points for discussion (rather than personal commitments to be defended), exploring differences, inventing new ideas from differences, avoiding compromise and searching for solutions acceptable to all. An exercise we used to introduce integrating to both the MBA course and the executive program is a card game called Barnga (Steinwachs & Sugar, 1984, pp. 6–8), sometimes referred to as Five Tricks. Barnga is played by groups of four people: two pairs at each table competing to win tricks. The deck is made up of ace, two, three, four and five in each of the suits of hearts, spades, clubs and diamonds. The game is positioned as a way to discover how we learn and adapt. Each table has the rules for the game, but unknown to the participants, the rules are slightly different from table to table. After a practice period when participants can talk, five-minute rounds of the tournament follow which are conducted in silence. After each round the winning pair move to the next table. In the third round a forced switching of partners at each table occurs. The simulation provides a hands-on reminder of many of the dynamics of cross-cultural situations. For example, it is especially effective in highlighting our tendency to negatively evaluate people we perceive as different. In the second round of the simulation, when pairs rotate to a new table, they first experience conflict
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over the rules. When two people reach to take a trick at the same time, the initial reaction of 90% of participants is to assume others are cheating or incompetent. We have only had to break apart a fist fight once (and it was between senior bankers in an executive program, not MBA or undergraduate students!), but this moment inevitably generates intense emotions and reminds participants in the debriefing that “knowing about differences” is different from “acting on differences.” Once differences are recognized, the communication challenge is to bridge different sets of rules and integrate to create a set of rules that everyone can play by. There are many different ways of proceeding. Some teams “agree” (by silent conversation or through sheer power on the part of one pair of partners or the other) to play either by “house rules” or by “winner’s rules.” Other teams, though, develop a new set of rules. In the card game the stakes are not high and the agreement is usually relatively friendly; however, in the debriefing, participants see clearly that if the situation were a joint venture negotiation or a merger integration, the temptation not to integrate would be higher and the payoff for integrating would be higher. The need to develop skills in integrating is clearly established. To practice these skills and apply these ideas people need to experience situations where they have to cooperate, usually some type of team task. The challenge for the team is to create outcomes that are more productive than if the task was done individually, or than if the participants had few differences. Participants learn most effectively if they can observe their own behavior, and see the effects of their behavior as they create a joint outcome. The ideal method is to videotape the process – especially the planning or preparation. The team should watch the replay afterward and conduct an analysis of their own behavior, guided by the framework of the organizing principle (in our case, the MBI model). This allows them to see the causes and effects of their behavior as well as the dynamics and patterns as they play out. They make connections between the model’s abstract concepts and those concepts’ manifestation in behavior. Furthermore, videotaping helps participants develop observational skills and self-awareness. We try to observe at least part of the videotape with the team, to provide coaching about the team’s and individual’s behaviors during this task. We also review the videotapes when requested by the teams. If there are many teams, it is impossible for the professor to help with all of them. In the MBA program we had Ph.D. students coach some of the teams through the observation and analysis process (this served a dual purpose of training the Ph.D. students as future coaches). In the executive program we employed professional coaches to supplement faculty resources. The combination of knowledge- and skill-based learning outcomes achieved by videotaping and observing afterwards is so powerful that we try to incorporate it into every program possible, no matter how short. The process greatly increases the effectiveness of learning, and makes an enormous difference in its long-term
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transferability to the workplace. We frequently hear from alumni that this experience enabled them to see all their meetings and interactions differently, and to act on their observations much more effectively. In the MBA program, we conducted many cases in which integration was a key component of coming to recommendations. For the observational process, we assigned special responsibility for one of these cases to each team. On the day scheduled for that case, the team formally presented their analysis and recommendations. We required the team to videotape their preparation for the presentation, as well as the presentation itself. Then, as a follow-up assignment to their class presentation, we asked them to critique their videotape using the MBI model as a guide, focusing especially on how their mapping and bridging processes influenced their integration about the issues in the case. This process had the advantage of being incorporated into the regular work of the course, and was seen as a meaningful way to enhance the course learning. In the executive program we conducted a decision-making exercise using the Hazelton International and An International Project Manager’s Day cases in an In-Basket format (Lane et al., 2000, pp. 173–186; McNett, 2000). The case involves expatriate managers building a road infrastructure in a remote part of Indonesia. As preparation, managers individually prioritize the in-basket items in terms of importance to the project, according to their reading of the case and the situation. The team then comes to a consensus set of rankings together, with the decision-making process video-taped. We compare individual decisions made prior to the team’s discussion with the team’s post-discussion decisions, and compare both against a panel of experts’ decisions to get a set of performance scores. Multicultural work experiences are relevant to both the substance of the case and the decision-making process, and we know that teams diverse in cultural dimensions and international work experience have potential to perform better on this exercise (Maznevski, 1994). This not only provides an opportunity to videotape their work, but also provides quantitative indicators of group effectiveness in a task where cultural diversity should be a potential advantage. The MBI model, and other concepts and frameworks, are aids in explaining each team’s performance.
Integrating over Technology As we noted before, changes in technology have significantly increased the challenge of managing differences globally. While the challenge for bridging is to achieve effective communication, the challenge for the integrating is to leverage the virtual configuration of people in order to unlock superior performance. To accomplish this, leaders must access team members’ differing contributions, draw in others’ networks and contexts and learn from related projects. In other words,
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leaders must take advantage of the fact that the people they are working with are not all in the same workplace. Developing these abilities to leverage distributed resources usually requires a deeper change in mindset than “just” learning ways to use the technology to improve communication. Rather than consider face-toface interaction a benchmark against which to measure virtual activity, the ideal is defined by the different possibilities inherent in the virtual-ness of the team. Managers must think about leading globally in a much more fluid, networked manner. For example, they should take advantage of the fact that members of a virtual team have much more diverse and rich networks of relationships than a co-located team is likely to have. Changing leaders’ mindsets involves more than technical training; it usually requires relevant experiences accompanied by careful reflection. We have found that both technical training and a shift in mindset can be kicked off with a twist to the team exercise described earlier, in which team members are located in different rooms. We conduct an exercise in which managers or students work in teams in study rooms, with each team working on a particular assignment. Simultaneously, each person is working with people in four or five other study rooms to complete a second assignment. The first assignment is completed face-to-face, while the second is conducted using telephone and computer communications technology. Both assignments are evaluated so performance can be analyzed.5 Participants are encouraged to use the time to complete the assignments in the manner that seems most appropriate to them. Almost without exception, participants tend to complete the face-to-face assignment first, and then try to simulate face-to-face communication as closely as possible while working on the second assignment with those in other rooms. They do not collaborate across tasks or across teams, even though the opportunity is there and the benefit is clear (based on post-exercise reflections). In the debriefing, the face-to-face and technology-supported interactions are brought into stark contrast, and best practices for management through technology are identified. Furthermore, participants in the simulation clearly see the opportunity they “missed” by not leveraging the situation and identifying the relationships between the assignments and across “sites.” The condensed and intense experience of managing these tasks allows for the development of a mindset that relates to daily situations in global organizations.
THE FINAL TRANSITION: THE “REAL WORLD” At the end of any program aimed at developing global managers, it is important to tie the skills and knowledge all together and develop a bridge to the (future) manager’s own context. Conceptual and behavioral abilities need to be combined, and the elements of the organizing principle have to be configured so participants
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can see how they work together. By doing this in an explicit manner, it helps them figure out how to apply the skills developed “at school” in the real world. In situations where participants have less international experience, we prefer a field project requirement like the one we used to conclude the MBA course. We require participants to interact in an in-depth way in a subculture with which they have little or no experience. We encourage imagination, and urge them to choose an environment about which they really want to gain more knowledge. Students have lived in long-term care facilities and suburb-dwellers have lived on farms. Many have engaged in long-term volunteer experiences that they had always wanted to do but hadn’t found enough motivation. One individual checked into the National Institute for the Blind and donned a blindfold for 72 hours. One of the most powerful projects we have seen was in this MBA course: the president of the university’s Jewish Student Union and the president of the Muslim Students’ Association switched places and coached each other through learning about their respective religions and cultures. The experience created very deep, insightful and positive lessons for everyone involved in this switch. We coach participants to prepare for the experience and have them keep careful records of their experiences, including emotions. Their reports include a brief description of the situation and their own differences and similarities relative to the subculture. They focus on an in-depth reflection and analysis of the experience, and conclude by making recommendations about what they can do to enhance future cross-cultural experiences. The MBI model and literature on expatriation and repatriation are often cited in their reports as having valuable information – usually much more than they thought when they read the literature during the course. When the MBA program is integrated and students use teams in other courses, we have assigned a reflection report on how those teams performed. For example, in one program a required module on product innovation processes was running parallel to our international organizational behavior module. The innovation module had a team report on the development of a new product. Instead of creating a separate project for our O.B. module, we distributed the measurement instruments in the O.B. module, assigned the usual cases and readings, conducted the usual simulations, and so forth. However, the group report assignment involved an assessment of the performance of the product innovation team in the parallel module. When the teams reported on their product development activities, our partner professor allotted extra time for team process reports in his module. We used the team’s grades on the product development project as performance measures for how well the multicultural teams progressed. Both the fieldwork report and the team report help participants to connect the ideas from the global leadership course to meaningful contexts in their lives, and this connection facilitates the transition of the skills to the real world context after graduation.
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Executive programs differ from MBA courses most clearly in this transition component. The best transition for managers focuses on a real international project designated by the company’s senior executives, using multicultural and multifunctional teams of participants. In the executive program we describe here, as part of the overall development process, each team was assigned a project related to the future global strategy of the company. Once the projects were completed, the participants presented them to the company’s executive committee, and the results were incorporated into the planning of the company. This project provided the transition vehicle for the executive program. During the two days we had in first module, we completed the Mapping, Bridging and Integrating components. Then, during the evenings and other allocated project time we worked with the participants, coaching them and connecting the MBI components to their real work. Between modules we worked with them virtually, coaching and reminding them about processes. For this group, as for many others, we facilitated their communication by establishing intranet facilities on our institute’s network. When the executives returned for the second module, we helped them debrief and discuss their processes to date, and conducted an advanced session on team performance. During this second week we observed them as they finished their projects and coached them to achieve high-quality processes and outcomes. There were no formal reports regarding group performance, although we encouraged periodic process checks during the project period. We provided a checklist form of the MBI model, and used it during the coaching and debriefing sessions. Through the coaching and continuous application of global management principles to their own work as they conduct it in real time, transition of learning to the real world is enhanced. In more recent designs with executives, we have used established measures of team process effectiveness to provide feedback to the team as a foundation for a performance discussion. Two that have been useful are the Team Climate Inventory (TCI) (Anderson & West, 1994; West, 1994) and the Team Performance Questionnaire (TPQ) (Riechmann, 1997, 1998). We ask all participants to fill out the survey, thinking about their own team’s processes. We then provide feedback to the team in terms of means and variances (not individual members’ scores). This feedback leads to a more focused discussion identifying what the team has done well and trouble-shooting areas for improvement.
CONCLUSION: INTEGRATION IS THE KEY TO IMPACT To get maximum results from curricula aimed at developing global leaders, we have described design details and a process built around initial orientation of participants; the development of mapping, bridging and integrating skills; and the
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transition from a learning experience to applying the knowledge in the real world. Many of the materials, exercises and other activities mentioned in this chapter will be familiar to readers who are experienced training professionals or academics. However, it is the ongoing and repeated integration of the entire mix of methods and materials that we believe to be the basis of high impact on the development of global managers. First, there is the conceptual and theoretical material of special relevance to multicultural leadership (for us, the concepts underlying the CPQ and the MBI model), which are grounded particularly on academic contributions. The introduction of measurements – developed through academic research – produces quantitative and qualitative data for these concepts, and makes the similarities and differences more tangible and real. The simultaneous integration of mini-cases and exercises – based on input from business professionals – using the data and concepts, illustrates how they play out in task-specific behavior. The cases illustrate the business scenarios that the concepts affect and allow participants to explore different implications for practice. The simulations and exercises demonstrate that behavioral skills, and not just ideas, are required. They also provide the participants with opportunities to experiment with their behavior, stretching beyond their comfort zones of preferred values and methods of thinking and operating. Finally, the reports and projects tie all the efforts to performance, a key factor in career, personal and organizational success. As we continue to evolve our program designs, it is the integration of these elements that we increasingly see making an impact on the development of global managers. As academics, we must continually question the organizing principles and conceptual models based on input from managers. New cases and new contexts must be added continually as applications. For example, over time we have emphasized more and more global projects as a context for global leadership, rather than expatriate cases, resulting in a higher degree of complexity in the application of conceptual models and a stronger emphasis on learning processes than on content knowledge. We have integrated technology components into many of our programs. Both shifts are based on continuous conversations with global managers with a wide variety of roles. In this chapter, we have set out principles for designing and executing programs for developing global leaders. Table 2 summarizes how we link together different design elements with particular instruments and materials, including those described in the chapter and with reference to other suggestions. Effective programs combine input from business practitioners and academics, and integrate these contributions both conceptually and in action. While we have illustrated the principles using a particular set of concepts and materials as applied to two specific cases, we hope we have described the important design elements and teaching processes in such a way that others can adapt them to their own needs and contexts.
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Table 2. Summary of Suggested Teaching Materials and Techniques. For the MBI Model Mapping: Understanding the Differences Culture Map • Cultural Perspectives Questionnaire Leadership Style Map • PDI Profilor™ , Leadership Behavior Inventory Personality Map • Jackson Personality Research Form, Element B-Behavior Gender Map • Tannen’s categories, Games Played in Youth exercise Cognitive Style Map • Myers-Briggs Type Indicator® Mapping Skills • Apply maps to videos (e.g. Going International series), mini-cases (e.g. Johannes van den Bosch Sends an Email, Johannes van den Bosch Receives a Reply, Gold Star Properties), personal experiences, prepared scenarios Bridging: Communicating Across the Differences Knowledge • Review research that demonstrates effectiveness of MBI model Introductory Exercises • Barnga, Ambiguous picture communication exercise, LEGO Blindfold Application Cases & Exercises • Cases and role-playing (e.g. Bob Chen & David Shorter, Japanese-American Seating Inc., Blue Ridge Spain) Integrating: Managing the Differences to Get Higher Performance Introductory Exercises • Barnga • Short negotiation simulations (e.g. Ugli Orange, Lewicki et al., 1988) Application Cases & Exercises • Video-tape and replay real team meetings • Project preparation • Tower Game • Hazelton International For the Transitions Initial Orientation
To Real World
• Build teams with diversity on dimensions relevant to key tasks • Build social relations & trust through informal activities (BBQ’s, cross-cultural dinners, ice-breaker introductions) • BaF´a BaF´a or Barnga simulations • Field Visits, Integrated Projects • Company Projects
NOTES 1. The highest impact so far was a Viennese woman marrying a Canadian man a few years after taking the course. He proposed on campus when they were back for a reunion. They now live in Australia.
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2. This simulation involves breaking the group into two societies, each with their own language, cultural values, distinct behaviors, rules, etc. After a preparation period, observers are briefed by their own group and sets of observers are exchanged with each charged with understanding the other group’s society. Projecting from their assigned cultures markedly influences the assumptions they bring to this task. Then small groups of visitors are sent to each other’s society and they receive the materials they need to actually interact with the group they are visiting. Again, the assumptions and values from their home society dramatically affect how they behave to, and how they interpret the actions of, their hosts. 3. This exercise itself has also led to at least one long-lasting marriage! 4. We have found it valuable to team-teach the case and role-play with a finance professor colleague. 5. We usually use the survival simulations (e.g. Desert Survival, Jungle Survival, Cascades Survival) available from Human Synergistics Center for Applied Research (http://www.hscar.com).
ACKNOWLEDGMENTS The designs described in this chapter did not, of course, drop into place with complete integration across all elements. As we do our research and gain experience, we continue to develop individual elements, experiment with various options that we use in other contexts and add concepts. Many of the ideas for improvements came from generations of participants – undergraduates, MBAs and EMBAs and practicing managers around the world. It is this group of participants to whom we express special gratitude for the privilege of working with them. Our faculty colleagues and our counterparts – professional training and development officers in the multinational companies – also contribute significantly to the evolution of these designs. They have had the courage to try new ideas, and the kindness and integrity to offer their penetrating observations and suggestions for improvement. We also thank the technical staff of our institutions, present and past, who have not only stretched the limits of the technologies (and sometimes patience) to serve our needs, but have added their own ideas and efforts with good cheer. Without the encouragement of all these colleagues, and the support of our respective families, this continuing journey to help develop global managers would have faltered long ago.
REFERENCES Adler, N. J., & Izraeli, D. N. (Ed.) (1994). Competitive frontiers and woman managers in a global economy. Boston, MA and New York, NY: Blackwell Publishers. Black, S., Morrison, A., & Gregersen, H. (1999). Global explorers: The next generation of leaders. New York, NY: Routledge.
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DiStefano, J. J., & Maznevski, M. L. (2000). Creating value in diverse teams in global management. Organizational Dynamics, 29(1), 45–63. Evans, P., Pucik, V., & Barsoux, J.-L. (2001). The global challenge: Frameworks for international human resource management. New York, NY: McGraw-Hill. Gregersen, H., Morrison, A. J., & Mendenhall, M. E. (Guest Eds) (2000). Human Resource Management, 39, 2–3. Hagberg, R. A., & Jackson, D. N. (1993). Leadership development report. London, ON: Research Psychologists Press. House, R. J. (1971). A path-goal theory of leadership effectiveness. Administrative Science Quarterly, 16, 321–338. Jeannet, J. P. (2000). Managing with a global mindset. London, UK: Pearson Education Ltd. Kealey, D. J. (1990). Cross-cultural effectiveness: A study of Canadian technical advisors overseas. Ottawa, CA: Canadian International Development Agency. Kluckhohn, F., & Strodtbeck, C. (1961). Variations in value orientations. Evanston, IL: Row, Peterson. Lane, H. W., DiStefano, J. J., & Mazneski, M. L. (2000). International management behavior: From policy to practice (4th ed.). Boston, MA: Blackwell Publishing. Maznevski, M. L. (1994). Synergy from diversity: Performance in multicultural teams. Ph.D. Dissertation, University of Western Ontario. Maznevski, M. L., & Chudoba, K. M. (2000). Bridging space over time: Global virtual team dynamics and effectiveness. Organization Science, 11(5), 473–792. Maznevski, M. L., & DiStefano, J. J. (2000). Global leaders are team players: Developing global leaders through membership on global teams. Human Resource Management, 39(2/3), 195–208. Maznevski, M. L., & DiStefano, J. J. (2002). The impact of culture on work. IMD Perspectives for Managers, 88, 1–4. Maznevski, M. L., DiStefano, J. J., Gomez, C. B., Noorderhaven, N. C., & Wu, P. (2002). Cultural dimensions at the individual level of analysis: The Cultural Orientations Framework. International Journal of Cross-Cultural Management, 2(3), 275–295. Mendenhall, M. E., K¨uhlmann, T. M., & Stahl, G. K. (Eds) (2001). Developing global business leaders: Policies, processes and innovations. Waterbury, CT: Quorum Books. Tannen, D. (1994). Talking from 9 to 5. New York, NY: William Morrow. West, M. (1994). Effective teamwork. Leicester, UK: BPS Books.
Cases, Instruments and Teaching Materials Anderson, N., & West, M. (1994). Team climate inventory. Windsor, UK: The NFER-Nelson Publishing Co. DiStefano, J. J. (2001a). Johannes van den Bosch sends an e-mail. Case GM 963. Lausanne: IMD International Institute for Management Development. DiStefano, J. J. (2001b). Johannes van den Bosch receives a reply. Case GM 964. Lausanne: IMD International Institute for Management Development. DiStefano, J. J. (2002). Gold Star properties financial crisis. Case GM 1066. Lausanne: IMD International Institute for Management Development. DiStefano, J. J., & Abramson, N. (1991). Bob Chen, 9A91C005 and David Shorter, 9A91C004. Research and Publications Division, Richard Ivey School of Business, The University of Western Ontario, London, Canada.
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Geringer, M., & Miller, J. (1992). Japanese-American Seating Inc. (A), 9A92G004. Research and Publications Division, Richard Ivey School of Business, The University of Western Ontario, London, Canada. Jackson, D. N. (1964, 1974, 1984, 1997). Personality research form. London, ON: Research Psychologists Press. Lewicki, R. J., Bowen, D. D., Hall, D. T., & Hall, F. S. (1988). Experiences in management and organizational behavior (pp. 104–106). New York, NY: John Wiley and Sons, Ugli Orange exercise. McNett, J. M., Athanassiou, N., Lane, H. W., & Wesley, D. (2000). Blue Ridge Spain NU00–001, College of Business Administration, Northeastern University, Boston, MA. Myers, I. B., & McCaulley, M. H. (1986). Manual: A guide to the development and use of the MyersBriggs Type Indicator® . Palo Alto, CA: Consulting Psychologists. Old Woman/Young Woman, from Levitt, H. J. (1972). Managerial psychology (p. 2). Chicago, IL: The University of Chicago Press. Riechmann, D. (1997). Team performance questionnaire: Facilitator’s guide. Chapel Hill, NC: DRC Associates. Riechmann, D. (1998). Team performance questionnaire. San Francisco, CA: Jossey-Bass Pfeiffer. Schutz, W. (1987). Interpretation of element B™ behavior: A FIRO manual. Mill Valley, CA: Will Schutz Associates. Shirts, G. (1977). BaF´a, BaF´a: A cross-cultural simulation. Del Mar, CA: Simile II. Steinwachs, B., & Sugar, S. (1984). Info-Line: Get results from simulation and role play. Alexandria, VA: American Society for Training and Development, No. 412. (BARNGA). The Tower Game. Research and Publications Division, Richard Ivey School of Business, The University of Western Ontario, London, ON, Canada N6A 3K7.
LEADERSHIP DEVELOPMENT IN ASIA: A PERSONAL VIEW Linda E. Laddin ABSTRACT I am not a scholar and this is not a scholarly article. This is a reflection on what I’ve observed and learned about leadership development during many years of living and working in Asia. I tell some stories, make shameless, sweeping generalizations, give highly opinionated views and offer totally subjective insights. I also do some lecturing. There are no charts or graphs and very few notes. I write mainly about American companies (with a bit about Japanese companies and a nod to the Swiss), because these are the organizations with which I am most familiar. By doing this I do not mean to let other companies and countries off the hook. A bit about me – I am a learning and development practitioner who has been in Asia since 1981, so I have had the opportunity to observe a lot. The first 16 years of that time I spent in Japan, working for Matsushita Electric Industrial, Arthur Andersen, Union Bank of Switzerland and Morgan Stanley. In 1998 I moved to Hong Kong to join Merrill Lynch. I’m now an independent consultant. Since 1981 I have worked in China, Hong Kong, India, Japan, South Korea, Malaysia, the Philippines, Singapore, Taiwan, and Thailand. My premise is that many American (and other) companies, whether they realize it or not, are approaching leadership development in Asia (and probably elsewhere) in a narrow and parochial way that limits the contributions of their Asian managers, and thus is not good for business.
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Instead of accepting and exploiting cultural differences, companies are either ignoring them or trying to expunge them. Instead of the lockstep global systems of performance management, training and review, I argue for using something called indigenous design in which people get to help design the criteria by which they are evaluated. Their contribution becomes part of the global performance management scheme. Indigenously designed training programs can be used in conjunction with corporate programs to fill in the bits that are missing from one-size-fits-all global leadership development. Indigenous design is happening in architecture, technology and social welfare programs – so why not in corporate learning and development?
SOME BACKGROUND For many years, American enterprises have explored various ways to identify, develop and nurture Asian leaders for their Asian businesses. Some companies continue to import Western expats or overseas-born and educated Asians to run their businesses. Other companies have set up leadership development programs in Asia and elsewhere. Motorola University China has been conducting leadership programs in China since 1993. In 2000 General Electric invited 40 of their high potential managers in Asia to the Asia Executive Course in Singapore, a two-week intensive leadership program taught by senior leaders in the firm.1 Some companies send selected managers and high-potential staff to training courses, MBA programs and short-term assignments abroad to indoctrinate them into the ways of the corporate culture and leadership practices. Many articles have been published and conferences have been held, which focus on the challenges of getting Asian managers “ready” to take on the demands of corporate leadership in non-Asian organizations. Forums have been held to discuss the leadership “challenge” in multinational corporations in Asia. Leadership programs and corporate universities have been set up to train promising future leaders. So many things have been tried, so much training at Stanford or Harvard or the Center for Creative Leadership, so many temporary assignments abroad to inculcate the corporate culture, so much done to try to instill the types of leadership skills that American companies value and believe they require.
AN ASIDE ABOUT JAPAN During the 1980s, Japanese companies were transferring manufacturing capability to Southeast Asia as fast as they could build factories. Many Japanese were sent to
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manage factories and operations in Indonesia, Malaysia, Thailand, the Philippines and elsewhere. I know this because I trained them in cross-cultural skills. The Japanese companies created training programs designed to prepare local managers for taking over operations when they were ready. The interesting thing was that the local managers never really seemed to be ready. A Japanese intercultural trainer moved himself and his family to Malaysia to work with Japanese companies and study their training practices and technology transfer. After two years he returned to Japan a disillusioned man. What he learned was that most of the Japanese companies had no intention of turning over management of their Southeast Asia operations to local managers. The Japanese managers didn’t seem to want to learn the local culture or get to know their local staff, and the Japanese companies wanted cheap labor to build their automobiles, refrigerators and air conditioners.
EDUCATION AND RECRUITING Asian companies and countries, for their part, have often looked to the West for opportunities to learn about business and management practices. Asians have sought higher education in the U.S. and Europe at Harvard, Stanford, London School of Economics, INSEAD and other famous institutions. How to Get Your Child into Harvard and other similar books are best-sellers in China. Talented and ambitious Asians clearly want the best opportunities to learn and develop their potential. One outstanding example is Marjorie Yang of the apparel giant Esquel Group who, after earning a math degree from MIT and an MBA from Harvard, returned to Hong Kong to help her father run the company.2 Another example is Masako Owada from Japan, who graduated from Harvard in 1985, and later attended Oxford University and the University of Tokyo while working for the Japanese Ministry of Foreign Affairs. Her public career came to an end with her marriage in 1993 to Crown Prince Naruhito. Those students who can’t or don’t wish to leave the region can attend MBA programs set up locally by well-known Western universities, often in cooperation with local institutions. The Hong Kong University of Science and Technology and Kellogg University, for example, offer an executive MBA program in Hong Kong taught jointly by professors from both universities. In 1999 Lingnan College of Zhongshan University in Guangzhou joined the Sloan School of Management’s MIT-China Management Project and now offers an International MBA program. INSEAD has established a center in Singapore where it offers MBA and doctoral programs as part of the INSEAD-Wharton Alliance. In addition to the famous schools, there are many smaller overseas institutions that have set up distance learning programs throughout Asia for undergraduate and graduate degrees.
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So we have many young Asians looking to the West for education and training, and Western companies recruiting new Asian graduates here and abroad who have attended famous Western universities. Companies are looking for the “best” and that is a “best” with which they’re familiar: well-educated young professionals who have been trained in certain ways by a select group of schools. The young graduates are looking for famous companies where they can start building their careers. It seems to be the perfect match. The question is, why do so few of these talented and well-educated people rise to the top of their organizations in Asia and elsewhere?
SOME PROGRESS With all these training efforts, how are MNCs doing at developing home-grown leaders in the region? In 1991 Singaporean Lim Ho Kee, former Chairman of UBS Asia, became the first non-Swiss member of the Enlarged Group Executive Board of Union Bank of Switzerland. In 2001 Merrill Lynch made Low Check Kian and Raymundo Yu co-chairs of the Merrill Lynch Asia Pacific region. Also in 2001, Samuel Poon and Ajmal Rahman became co-heads of Merrill Lynch investment banking in Asia Pacific. There may be a few more but the numbers are still small, especially in American firms. There is no shortage of talented and successful leaders of Asian companies in Asia. Despite this, and all the education and training, the belief persists in some American companies that Asia lacks people who have what it takes to lead American businesses. Somehow they never seem to be ready to take over. One of the many reasons may be that Asian managers are evaluated according to standards that don’t fit their culture or their ways of doing business.
THE EXPATRIATE REVOLVING DOOR Some companies have given up on promoting Asians to head businesses. Far too many American organizations still have the revolving-door management practice – a new and often new-to-Asia expatriate arrives on the scene every two to three years to either run the organization or watch over those who do, in addition to trying to spread the corporate culture. Part of the mission is to give the expatriates some “international experience” to prepare them for more senior roles at home or elsewhere. Another part of the mission may be to identify and groom a local replacement. Often, the expatriate will return to the head office at the completion of the assignment, replacement mission not accomplished, leaving the host country employees in leadership limbo yet again, waiting for the next expatriate to arrive.
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MODELS OF LEADERSHIP When trying to develop leaders in Asia and elsewhere, companies usually use as their model an ethnocentric leadership template created in the image of leadership in the company’s home country. Companies tend to design leadership competencies around their own cultural norms, having decided that those criteria are what it takes to be successful in the organization and the industry. The leadership competencies developed invariably include something termed “global leadership skills,” or “ability to provide global leadership,” or “understanding of global leadership issues.” Despite the (ironic) inclusion of characteristics such as flexibility, lateral thinking and even tolerance for ambiguity, these competencies and the ideas about leadership behind them tend to be fairly rigid within each organization and culture. We know what leadership looks like and it’s “this,” not “that.” We know what leaders do and it’s this, not that. We know what makes us comfortable and it’s this, not that. Thus, there are global organizations with a static model of leadership that is expected to be applied all around the planet. Thousands of expensive consultant hours go into creating a 360◦ multirater feedback instrument (seldom adapted for cultural differences), performance review criteria and global leadership seminars and workshops, all based on the model. Training budgets are created to train managers and leaders how to interact with others, how to manage their staff, how to lead meetings, how to make presentations, all in the style of the head office norms. Some firms send trainers out from headquarters to conduct training programs in company offices all over the world, so that everyone will be “on the same page” and speak the “same language.”
SO WHAT’S THE PROBLEM? All of this effort is understandable if one looks at it from an American point of view. Because of the proliferation of American cultural and business practices, American companies almost inevitably view their methods and values as the global standard, or well on the way to it. That’s a very comfortable place to be for many American business people, whose awareness of and familiarity with other cultures may be minimal. Most of us tend be most comfortable with people whose styles are very similar to our own, and Americans are no exception. We search for commonalities without recognizing and valuing differences. If people walk our walk and talk our talk, then we are comfortable. The problem with that is that we and our organizations don’t learn when we’re comfortable.
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THE DOWNSIDE One of the dangers of uniform global leadership programs is that they seem to have the intention of neutralizing local differences and ways of thinking – the very things that add zest and creativity to global organizations and which those organizations should value highly. The aggressive export of American management techniques and leadership styles is sometimes seen as a form of cultural imperialism which, along with the values and cultural assumptions of Western society, threatens to smother the unique ways and contributions of other cultures. While American management and leadership methods and styles have much to offer, they may not always be the most effective ways to get desired results outside the U.S. Control is probably one of the unspoken objectives of leadership training and development. The wish to get others to act differently is a wish to control them, which in itself creates its own resistance.3 Control is essential in organizations: financial control, risk management, codes of conduct, compliance guidelines, etc. Barings didn’t control Nick Leeson and he brought down the bank in 1995. Lack of sufficient controls and senior management greed doomed Enron, WorldCom, Tyco, Global Crossing and Adelphia Communications in 2002. These shocking scandals have raised some doubts in other countries about the superiority of U.S. accounting practices and the wisdom of American business leadership. It may also be a good time to rethink how we train our managers and leaders. This is not intended to accuse American and other Western enterprises of anything other than trying to train their staff to be successful in their organizations. My argument is not with performance management or leadership training, but with how they are designed and implemented. There are some enlightened companies who realize that cultural differences in leadership are valid and not going to go away, and that homogenizing leadership not only doesn’t work but also limits and diminishes the organization. They train leaders, knowing that the actual application of leadership skills should and will be done in ways appropriate to each leader’s own cultural norms. Their next step is to get those leaders involved in the design of the training.
CULTURAL DIMENSIONS Leadership development is part of the whole performance management cycle that pervades large companies in these times. In performance management, employees are individually accountable for everything they do and are evaluated once or twice a year on job performance, management skills, communication skills, technical skills and progress in the development areas identified in the previous evaluation cycle. These evaluations may be purely developmental or may be tied
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to the compensation system. While it’s perfectly reasonable for companies to expect their senior people all over the world to follow corporate guidelines, sound commercial practices and perform to high standards, it’s another to expect them to change a lifetime of social and cultural conditioning and learning, and to become different human beings whose behaviors may not feel natural to them. While the globalization of business may be inevitable, the globalization of human beings is not. To get a better understanding of why American leadership criteria may not be appropriate for use in many other countries, let’s take a brief look at some key ways that cultures differ. In 1980 a Dutch anthropologist first published the results of his research in cultural dimension. Geert Hofstede studied thousands of IBM employees around the world and found major differences among them in four cultural dimensions. Here they are in short form.
Power Distance Power distance describes the extent to which the less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally.
Collectivism Versus Individualism Collectivism describes a society in which people from birth onwards are integrated into strong, cohesive ingroups, which throughout people’s lifetimes continue to protect them in exchange for unquestioning loyalty. Individualism describes a society in which the ties between individuals are loose. Everyone is expected to look after himself or herself and his or her immediate family only.
Femininity vs. Masculinity Femininity describes a society in which social gender roles overlap – both men and women are supposed to be modest, tender and concerned with the quality of life. Masculinity describes a society in which social gender roles are clearly distinct. Men are supposed to be assertive, tough and focused on material success; women are supposed to be more modest, tender and concerned with the quality of life.
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Uncertainty Avoidance Uncertainty avoidance is the extent to which members of a culture feel threatened by uncertain or unknown situations.4 When he updated and reformulated his original 1980 work, Culture’s Consequences, for publication in 1991, Hofstede included an additional dimension:
Long-Term vs. Short-Term Orientation Long-term orientation describes a culture which fosters virtues aimed at future rewards, in particular perseverance and thrift, and respecting the demands of virtue. Relationships are organized and observed by status, and a sense of shame governs behavior. Short-term orientation describes a culture which fosters virtues related to the past and present, in particular respect for tradition, preservation of “face,” fulfilling social obligations, personal steadiness and stability, and concern with possessing the truth. The very interesting thing about this last dimension, originally called Confucian dynamism, is that it could only be detected with a questionnaire designed by Chinese social scientists [research organized by Michael Bond of Chinese University of Hong Kong5 ], and reveals deep differences between Eastern and Western thoughts related to the importance of “virtue” vs. “truth.”6 For anyone with some familiarity with the U.S. and Asian countries, it’s clear that these dimensions address some major differences between American and Asian cultures. I’m not going to describe all of Hofstede’s brilliant study here – it’s much more interesting to read it for yourself – but I’ll highlight some key points. These dimensions describe cultural orientations so ingrained that we are often not even conscious of the roles they play in our behavior and our lives. Examining some basic assumptions about business behavior, we observe that, in the U.S., being assertive and readily giving one’s opinion are admired characteristics in business leaders and leaders in general. This is known as “thinking on one’s feet.” People who don’t have a ready answer may be considered slow or weak. In many parts of Asia, just the opposite is true: listening and noticeably thinking things through before speaking are more admired traits. People who speak without first appearing to think over their answers are often considered superficial and careless. Another example is the unwillingness of junior people to express disagreement with their managers or other senior people, a phenomenon that can be observed
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in many Asian countries. Most of those countries rank very high on the power distance scale. The U.S., the U.K., Germany, Australia and New Zealand rank closer to the bottom of the scale. China, Hong Kong, Taiwan, Japan and South Korea are at the very top of the scale for long-term orientation (followed closely by India, Thailand and Singapore), while the U.S., U.K., Australia and New Zealand are near the bottom. Collectivist cultures give attention to the power of the group and the power of personal connections and ties. When one is looking for a job, being personally introduced to a company by someone the company knows and trusts carries far more weight in many Asian cultures than qualifications or personality, though those may be impeccable. More individualistic Western companies may prefer to rely on rigorous recruiting systems, which have the appearance of fairness and evaluate applicants on the basis of individual educational and work qualifications. Introductions by well-connected outsiders may be viewed as an unfair advantage.
IMPLICATIONS FOR INDIGENOUS DESIGN We are brought up with our own culture’s view of the world and begin internalizing that view almost from the cradle. It makes sense that the people who determine an organization’s guiding leadership principles and desired behaviors are going to use the set of orientations with which they are most familiar – those of their home country and culture. Setting leadership standards based solely on one culture is like deciding to eat only one type of cuisine for the rest of your life. You may be satisfied with it, but you’re missing a lot. The world is full of a wonderful variety of ingredients dishes and tastes. Being more inclusive gives you a wider choice of places to go and more opportunities to learn and develop your palate. Good leadership, like good food, looks different in different places. There are outstanding leaders all over the world, in business and politics, with different styles, practices, personalities and cultural orientations. While they may not do things the way “we” would do them, they are effective leaders in their environments and often outside of them.
INTRODUCING INDIGENOUS DESIGN Training managers and leaders about corporate culture is fine and right – every firm wants its employees to follow good business practices and understand how the firm
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works. Every firm has its own internal policies and procedures, which employees should observe. But if leadership competencies created by American companies for global use are not globally valid, then how can companies set performance standards, and train and evaluate their leaders around the world? Companies can, of course, choose to exclude people who don’t fit their profile of good leaders, but they would be eliminating many excellent people who could enhance and grow the business. Instead, companies could introduce indigenous design into the creation of performance criteria for leaders and managers. They can stop telling and start asking. They could include the employees from different cultures in the design of their own standards and performance criteria. No involvement, no commitment.7 If managers and leaders aren’t involved in the creation process, the commitment to the process and the criteria won’t be there. I would be a rich woman today if I had a dollar for every time I’ve heard Asian managers in MNCs complain about the way they are trained and evaluated, as though the firm was trying to change their values and personalities. Many people feel that their culture is being rejected by their employer, and that they aren’t being valued or trusted for whom they really are and what they can do. While I am not a believer in total cultural relativism, especially relating to human rights, I do know that it is difficult if not impossible to judge another culture’s behaviors by the norms and standards of one’s own culture. Even designing a questionnaire about culture is full of assumption traps. Without some understanding of other cultural backgrounds, we naturally and inevitably interpret other cultures through our own cultural filters. Things that are different are not necessarily wrong. By being more inclusive, we expand our knowledge and tolerance as well as business options and opportunities. If more large Western companies tried this approach, they could expand their horizons, broaden their thinking and be truly global in their performance systems. Indigenous design may not solve all problems, but it’s a good place to start.
IMPLEMENTING INDIGENOUS DESIGN What does indigenous design look like and how does it happen? I see indigenous design in a multinational corporation as a way of creating or tailoring a process or program to fit the host culture and norms while maintaining the character of the global organization. If an Asian subsidiary of an MNC asked me to help them create their own process or program of some kind, where would I start? I see at least two ways to approach this work. One way is to start with nothing but the objective and build the process or program from the ground up, incorporating local and, when
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necessary, global characteristics. Another way is to start with the global process or program and find ways to make it harmonious with the local culture and norms. Let’s say that the subsidiary has asked for help with developing a performance management and evaluation system. We could begin by examining the current system created by the head office. I would invite all staff members to examine the system for elements that fit with their culture and elements that don’t seem to fit. What do they like about it? Which parts of it work in their culture? What parts should be kept for alignment with the global organization? Should anything be removed? After the group has identified what they would like to keep from the original system, they could then identify what they would add to it. What elements from their own culture would they like to include? What would they change? They may choose to emphasize relationships and teamwork, for example, and to de-emphasize internal competition and individualized recognition. If there is no head office design, then the group could build their own process from the beginning. There may be programs and processes that they wish to implement locally that don’t exist at the head office or global level. In this case, they could build something for local use that could be modified later for global application. The value of the design process is just as important as the design results. Letting people have a say in shaping the world in which they work every day is far more humane and practical than forcing them to follow processes unrelated to their norms and values. I believe that as many people as possible should be involved in the crafting of the desired objective, whether it’s an interview protocol or performance evaluation criteria. In addition to designing their own future, the group will have a chance to share their vision for the organization and for themselves as part of the organization. What’s created should come out of a common vision and shared cultural and social knowledge of the group. It won’t necessarily be better than the head office version, but it will be different and richer in elements important to the local group. From my experience, indigenous design would be welcomed by many affiliates and subsidiaries of multinationals in Asia. The head office in the United States often divides Asia into two or three main territories or regions. One is Japan and the other is Asia Pacific, sometimes called “non-Japan Asia.” The corporations with three Asia regions often use Japan, Greater China and Southeast Asia. The latter is sometimes called “Australasia” if there are offices in Australia and New Zealand. In these convenient but misleading designations, countries that often have little in common are lumped together into the same business region. Their cultures,
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languages and business priorities may be quite different, and they may benefit from having their own self-designed processes and programs.
HOW TO USE INDIGENOUS DESIGN The use of indigenous design is appropriate in designing learning tools, training programs and case studies for management and leadership programs. It could also be helpful in identifying performance competencies, selection criteria for interviewing and hiring, promotion criteria and other human resources processes. Indigenous design would be very useful in designing client relationship practices, training and even software suited to the clients in a particular country or culture.
OBJECTIONS Objections to indigenous design are usually about global consistency and uniformity. People in control in the head office tend to want processes, forms and programs to be consistent globally. There’s a certain amount of fear of “letting the inmates run the asylum.” Some uniformity is important, especially concerning financial reporting, regulatory compliance, internal auditing standards, computer systems and other technical and legal matters. Having said that, every organization for which I’ve worked has had many versions of performance management systems, interview protocols, talent management systems and other “firm-wide” processes all operating at once across different divisions and around the globe. This is in addition to the many and varied software programs and hardware setups in offices around the world. It’s difficult to make an argument for global consistency when there is already so much internal inconsistency, especially in organizations where each silo or division has the clout and power to create its own unique systems.
NOTES 1. http://www.ge.com/singapore/ge lead.htm 2. http://www.chamber.org.hk/info/the bulletin/oct 2000/esquel.asp 3. Block, P. (2002). The answer to how is yes: Acting on what matters. Berrett-Koehler Publishers. 4. Hofstede, G. (1991). Cultures and organizations: Software of the mind. McGraw-Hill. 5. Ibid., p. 160. 6. Ibid., p. xi. 7. Covey, S. R. (1989). The seven habits of highly effective people. Simon & Schuster.
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ACKNOWLEDGMENTS Many thanks to my mentor, Dr. George Renwick, for suggesting to me the term “indigeneous design” several years ago.
REFERENCES Block, P. (2002). The answer to how is yes: Acting on what matters. Berrett-Koehler Publishers. Covey, S. R. (1989). The seven habits of highly effective people. Simon & Schuster. Hofstede, G. (1991). Cultures and organizations: Software of the mind. McGraw-Hill.
CONCLUSIONS William H. Mobley and Peter W. Dorfman Unless one keeps rowing the boat forward, the current will take you backward. You cannot stand still, only go forward or backward. An Old Chinese Proverb.
Our objectives in this series include discussing new and refined theories, models, metrics, insights and approaches, i.e. “oars and rudders” that will enhance our individual and organizational effectiveness in leading into the rapid and dynamic currents of globalization. Our objectives also include hearing from academics and practitioners from multiple cultures and settings. We believe we have accomplished these objectives. Our authors include leading researchers and theorists from universities in China, England, Hong Kong, Korea, Netherlands, New Zealand, Switzerland, and the United States. Our authors also include thought leaders from leading global corporations such as Royal Dutch Shell and Merrill Lynch, and leading leadership development organizations including Personnel Decisions International (PDI) and the Center for Creative Leadership (CCL). Such diversity of perspectives has provided a needed and stimulating set of new or refined “oars and rudders” for our ongoing voyage in global leadership. What are some of the themes and patterns that emerge from the chapters in this volume, and the broader literature on global leadership and global leadership development? Trust plays a central role in building social capital and economic success in global organizations (Hitt, Keats & Yucel); in facilitating the regulators of the centrifugal and centripetal tensions in global organizations (Hofmeister & Parker); and in leading and teaming at a distance (Davis & Bryant). Influence tactics of rational persuasion, consultation, collaboration and appraising were identified as effective tactics across all 11 countries studied by Kennedy, Fu Advances in Global Leadership Advances in Global Leadership, Volume 3, 387–389 Copyright © 2003 by Elsevier Science Ltd. All rights of reproduction in any form reserved ISSN: 1535-1203/PII: S1535120302030186
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and Yukl. In a similar vein, Denison et al., found similar patterns of effective corporate cultures around the world, and Smith in his research continually finds that managers everywhere rely more on their own experience and training than on any other source of guidance. When looking at the goal of executive development for global leaders, it should be comforting that there are similarities in effectiveness despite huge differences in national cultures. What are some of the other “oars and rudders” presented in this volume? Boudreau, Ramstad and Dowling present cogent arguments and the outline for establishing a decision science linking strategic talent and strategic business success. One can only imagine the broad impact on leadership and talent development if such a decision science could be can be brought to maturity! Baik demonstrates the role of the leader in defining issues, in providing sense making for organizational members. Issue leadership theory deserves greater attention as the complexity and speed of globalization accelerates. In considering the development of leaders, we are reminded again that it is not simply a matter of individual differences in competencies, skills and attitudes. It is the fit between the individual and strategy, structure, phase of organizational development, and situation that helps determine effectiveness (Boudreau, Ramstad & Dowling; Sloan, Hazucha & Van Katwyk). Further, individuals, organizations and settings are not static. Thus, the ability to learn from experience and to demonstrate cultural adaptability are important precursors in leading across borders (Deal, Leslie, Dalton & Ernst; DiStefano & Maznevski). Hollenbeck and McCall provocatively suggest a paradigm change in leadership development from that of identifying a requisite set of skills and competencies to be mastered, to an emphasis on the development of competent global leaders through leadership challenges. Through our journey in moving the global leadership boat forward, we might consider some leadership myths that have been debunked by our scholars.
MYTHS (1) Because outstanding leadership is a mystifying and complex phenomenon, and because the increasingly global nature of leadership makes it even more so, we have very little useful practical information to help develop or guide global leaders. (2) Global leadership development must involve formal, intensive, and thus, timeconsuming and expensive training programs. (3) There are a well defined and agreed upon set of leadership competencies that should be the focus of global leadership development programs.
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(4) Empirical cross-cultural studies inevitably find large cross-cultural differences. (5) Because of huge cross-national cultural differences, there are few if any general leadership guidelines, principles or laws that travel well across cultural boundaries. (6) Global leaders are “born” (nature) rather than “developed” (nurtured). The truth is that there is a bit of both, perhaps, but definitely experience and learning play a major role. As we look to the future, we would hope to see more attention given to a number of issues. (1) A deeper understanding of the unique common and interactive influences of company and country cultures on leadership and organizational effectiveness. (2) Attention to the effects of globalization of business processes on the relative importance of cultural variables in general, and specific, cultural dimensions in particular (e.g. individualism/collectivism). A natural supposition is that global business practices will lead to cultural convergence, but this may occur for some cultural variables, not others. (3) When conducting cross-cultural studies, more use of indigenous expertise in developing individual and organizational measures (versus simple translations of Western measures). (4) More detailed specification of the kinds of experiences and challenges (Hollenbeck & McCall) that prepare individuals for effective leadership in international settings. (5) Conducting empirical research that focuses on the often subtle manner in which cultural differences manifest themselves, particularly with respect to the enactment of leader behaviors or styles that on the surface seem to be quite similar across cultures. (6) Research that explores cultural differences with respect to tacit knowledge and mental models of leaders in contrast to research that focuses on more overt behavioral differences in leadership among cultures. (7) Exploring the global leadership “development” that may occur in the context of dialogue among leaders solving real-world, and real-time organizational problems in contrast to formal development programs. The journey continues.
ABOUT THE EDITORS William H. (Bill) Mobley is Professor of Management at China Europe International Business School (CEIBS) in Shanghai where he teaches the MBA and EMBA leadership and strategic HR modules. He also serves as President and Managing Director of the Global Research Consortia (GRC), a consortium of multinational firms that sponsors organizational, I/O psychology and strategic talent management research in emerging markets by awarding grants to university faculty globally. Bill earned his BA degree in psychology and economics from Denison University in the U.S. and his Ph.D. degree in industrial-organizational psychology from the University of Maryland, College Park. He also has been awarded honorary degrees from the University of the Americas in Pueblo Mexico and the University of Akron. He is a Fellow of the Society for Industrial-Organizational Psychology (SIOP) and a Registered Organizational Psychologist in Hong Kong. Bill previously served as Corporate Manager of HR Research and Succession Planning for PPG Industries; as Professor of Organizational Behavior, Dean of the College of Business Administration and later President of Texas A & M University. He has served as a Senior Fulbright Scholar at National Taiwan University, a Visiting Professor at the Hong Kong University of Science and Technology, an Honorary Distinguished Professor at the Chinese University of Hong Kong, and as a Visiting Fellow at Cornell University. His research interests include global leadership, organizational culture, employee motivation and turnover, strategic talent management, and multinational effectiveness. He is author of Employee Turnover; Causes, Consequences and Control (Addison Wesley, 1982) and has published multiple articles in major journals including the Academy of Management Journal, Academy of Management Review, Journal of Applied Psychology, Organizational Behavior and Human Decision Making, Personnel Psychology, Psychological Bulletin, among others. Bill is Executive Editor of Advances in Global Leadership, JAI/Elsevier Science, Vol. I. (1999); Vol. II. (2001); and Vol. III. (2003). Bill serves on the Board of Directors of: Medici Medical Corporation; the AMMA Foundation; Concept Technology Holdings Limited (Hong Kong), Nouveau Software (Shanghai) Limited. He is a US representative on the Pacific Economic Cooperation Council (PECC). He also provides executive coaching and strategic talent management consulting to multinational firms in Asia and 391
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globally. Peter W. Dorfman is a full Professor and the Department Head of the Department of Management, NMSU. Dr. Dorfman’s research interests span both the human resources management and organizational behavior fields. His articles on leadership, cross-cultural management and employee discrimination have appeared in the Journal of Applied Psychology, Academy of Management Journal, Academy of Management Review, Journal of Management, Advances in International Comparative Management, and Advances in Global Leadership, among others. He is currently investigating the impact of cultural influences on managerial behavior and leadership styles. He has been a co-principal investigator of the Global Leadership and Organizational Behavioral Effectiveness (GLOBE) Research Project. In addition, he is an expert witness and consultant in employee discrimination and sexual harassment cases.
ABOUT THE CONTRIBUTORS Kibok Baik is a professor of management at the College of Business and Economics, and Head of Strategic Leadership Center, Kookmin University, Seoul, Korea. He earned his Ph.D. in organizational behavior from the University of Houston. His research interests focus on leadership, cross-cultural issues, and human resource development in multinational corporations. He currently advises dozens of firms in Korea. John W. Boudreau, Ph.D., Professor of human resource studies at Cornell University is recognized worldwide for breakthrough research on the bridge between superior human capital, talent and sustainable competitive advantage. His research has received the Academy of Management’s Organizational Behavior New Concept and Human Resource Scholarly Contribution awards. He consults and conducts executive development with companies worldwide and has published more than 40 books and articles, including the best-selling Human Resource Management (Irwin, 1997), now in its eighth edition in multiple languages worldwide. In addition to HR metrics, Dr. Boudreau’s large-scale research studies and highly focused qualitative research have addressed decision-based HR, executive mobility, HR information systems and organizational staffing and development. Winner of the General Mills Award for teaching innovations, Dr. Boudreau also founded the Central Europe Human Resource Education Initiative, and directed the Center for Advanced Human Resource Studies (CAHRS). Janet L. Bryant is a doctoral student in the Ph.D. program in industrial and organizational psychology at Old Dominion University. Her research interests include leadership, virtual work and cross-cultural issues. She completed her undergraduate degree at the University of Tennessee-Knoxville. Maxine Dalton is an industrial/organizational psychologist who received her education at the University of South Florida. Her research interests include adult learning and executive development. Her current research is on leadership and social identity conflict in organizations. She has published numerous book chapters, articles and a recent book on global leadership. Donald D. Davis received his Ph.D. in psychology from Michigan State University in 1982, where he also served as assistant director of the Center for Evaluation and Assessment. He has been a professor of organizational psychology at Old 393
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Dominion University since that time. He served for seven years as director of the Ph.D. Program in Industrial and Organizational Psychology and has served as a member of the board of directors of the Institute for Asian Studies since its creation in 1989. He has been awarded two Fulbrights – Asian Scholar in Residence (with Zhong-ming Wang, Hangzhou University – now Zhejiang University – Hangzhou, China) and Senior Scholar (Wuhan University, Wuhan, China). He has also held a visiting appointment at the University of Virginia. His research interests include virtual organizations, organization change, technological innovation, cross-cultural organization and management practices, and Chinese organizations. He has published one book and a number of papers on these topics. Jennifer J. Deal is a Research Scientist at the Center for Creative Leadership in San Diego, California, concentrating on global leadership and managing the Emerging Leaders project, which focuses on generational issues in the workplace. She has published a number of articles on topics including generational issues in the workplace, working globally, executive selection, and women in management, and a recent book on global leadership. She holds a B.A. from Haverford College, and a Ph.D. in industrial/organizational psychology from The Ohio State University. Daniel Denison is Professor of Management & Organization at the International Institute for Management Development (IMD) in Lausanne, Switzerland and is the Founder of Denison Consulting in Ann Arbor, Michigan, USA. He is former Professor of Organizational Behavior and Human Resource Management at the University of Michigan in Ann Arbor, Michigan. He is the author of Corporate Culture and Organizational Effectiveness (1990) and a number of articles on the link between culture and business performance. His survey assessments of culture, teams, and leaders are widely used by many organizations around the world. His website, www.denisonculture.com has extensive information on his work. Joseph John DiStefano is Professor of Organizational Behavior and International Business at IMD International Institute for Management Development (Lausanne, Switzerland) and Professor Emeritus of the Richard Ivey School of Business, The University of Western Ontario (London, Canada). He was educated at R.P.I., Harvard Business School and Cornell University and has been active as a teacher, researcher and consultant on issues of cross-cultural effectiveness since the early 1970s. Peter J. Dowling (Ph.D., The Flinders University of South Australia) is Pro Vice-Chancellor and Professor of International Management & Strategy in the Division of Business, Law & Information Sciences, University of Canberra. Previous appointments include Foundation Professor of Management at the University of Tasmania, Monash University, the University of Melbourne, and
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California State University-Chico. He has also held visiting appointments at Cornell University, Michigan State University, the University of Paderborn (Germany) and the University of Bayreuth (Germany). His current research and teaching interests are concerned with International HRM and Strategic Management. His co-authored text International Human Resource Management: Managing People in a Multinational Context, published by South-West, is now in a third edition. He is a former national Vice-President of the Australian Human Resources Institute, past Editor of Asia Pacific Journal of Human Resources (1987–1996), and a Life Fellow of the Australian Human Resources Institute. Chris Ernst is a Research Associate at the Center for Creative Leadership with an international background, and a Ph.D. in Industrial/Organizational Psychology from North Carolina State University. His work centers on advancing the capacity for leadership in a diverse and globally interconnected world. Ping Ping Fu is an assistant professor of management at the Chinese University of Hong Kong. Her research interests are mainly in leadership and cross-cultural areas. She was the coordinator for the Chinese part for the Global Leadership and Organizational Effectiveness (GLOBE), and is now leading the CEO study in China. She has published in Journal of Organizational Behavior, International Journal of Human Resource Management, Journal of International Applied Psychology and Leadership Quarterly. Paulo Goelzer is President of the IGA Institute, an educational foundation providing training to 40 countries in five languages and oversees their international operations. He began his career in the food industry very early, working in a family food business. He has also worked as a senior consultant for Strategy and Food Package Goods Industry Practice for a German/Brazilian consulting company, a researcher and consultant for the Brazilian Wholesaler Association (ABAD), and as a Marketing Director for a grocery wholesale company. Mr. Goelzer began his academic career as an assistant professor of Business Strategy and Marketing for one of Brazil’s most renowned universities, Pontifical University Catholic. During his time at the University, Mr. Goelzer received the “Honored Professor” Award twice, in 1989 and 1990. He has earned two master’s degrees, a M.S. in Marketing, and a M.A. in Economics, as well as a B.S. in Business. He is currently a Ph.D. candidate at Benedictine University in Lisle, IL. Mr. Goelzer is also the former international editor for the Brazilian trade journal, Distribu´ıc¸a˜ o, contributing numerous articles on marketing and logistics, and is co-author of the textbook Distribu´ıc¸a˜ o de Classe Mund´ıal. In addition, Mr. Goelzer is member of the Coca Cola Research Council Latin America and of the Marketing Committee of CIES in France.
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Stephanie Haaland is the Research Director at Denison Consulting in Ann Arbor, Michigan. She earned her MA and Ph.D. degrees in Industrial/Organizational Psychology from Central Michigan University in Mt. Pleasant, Michigan. She manages the research program at Denison Consulting and consults with organizations that are interesting in empirically demonstrating the link between organizational culture and leadership and their bottom-line business measures. Her research interests include linking organizational culture, leadership, and teams to bottom line business performance and the contributing factors for employee’s who engage in counterproductive behavior at work and in organizational citizenship behaviors. Joy Hazucha is a Senior Vice President at Personnel Decisions International, where she has worked in consulting, research and leadership since 1983. She has lived in six countries and worked in more than a dozen, consulting with multinational organizations based in the U.S. and in Europe. She holds a Ph.D. in Industrial and Organizational Psychology from the University of Minnesota. Michael A. Hitt holds the Weatherup/Overby Chair in Executive Leadership at Arizona State University. Formerly a Distinguished Professor of Management at Texas A&M University, he received his Ph.D. from the University of Colorado. He is a past President of the Academy of Management and former editor of the Academy of Management Journal. A member of the Academy of Management Journals Hall of Fame, his research focuses on international strategies, the importance of human capital in gaining a competitive advantage, corporate governance and strategic entrepreneurship. John Hofmeister has served as HR Director for Royal Dutch/Shell Group of Companies since 1997 and lives in The Hague, Netherlands. Prior to Shell, John served as VP International Human Resources, based in Hong Kong, for AlliedSignal, Inc. (now Honeywell) and was also the VP Human Resources for AlliedSignal Aerospace, which he joined in 1992. From 1988 John worked at Nortel’s Switching Business as HR Director and later became VP Human Resources for Nortel’s U.S. businesses. He joined GE in 1973 on the HR Management Program working in six businesses over 15 years. He has both bachelor and master’s degrees in Political Science, from Kansas State University. George P. Hollenbeck is an organizational psychologist specializing in executive leadership development. His career includes positions at Merrill Lynch as Vice President-Human Resources, Fidelity Investments as Vice President Organization Planning, and the Harvard Business School as Senior Director, Executive Education. After receiving his Ph.D. from the University of Wisconsin, George
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worked at IBM and The Psychological Corporation, and he was a post-doctoral fellow at the University of California, Berkeley prior to joining Merrill Lynch. As a senior executive at Merrill, he attended Harvard Business School’s Advanced Management Program. He is a Diplomate of the American Board of Professional Psychology, and a licensed psychologist in New York and Massachusetts. George consults, teaches and writes about leadership. His consulting focuses on business leadership at all levels, working individually with a wide range of executives to augment their development. He is an Adjunct Professor at Boston University Graduate School of Business Administration and at Texas A&M University. Barbara W. Keats is a Professor of Management at Arizona State University. In addition to her Ph.D. in Business, she has advanced degrees in Psychology and Theology. Her research has addressed issues of strategic management and organizational effectiveness, and most recently has addressed trust and values as critical organizational attributes. She advises a number of non-profit as well as private sector organizations on various strategic and management issues. Jeffrey C. Kennedy received his B.Sc. (Hons) in industrial/organizational psychology from the University of Canterbury and worked as a Naval psychologist and senior consultant for Ernst & Young before joining Lincoln University, New Zealand, where he is currently a Senior Lecturer. His primary research interest is cross-cultural leadership, and he is the New Zealand coordinator for the Global Leadership and Organizational Effectiveness (GLOBE) project. Much of his contribution to this chapter was completed while he was a visiting fellow at Nanyang Business School, Singapore. Linda E. Laddin has been a corporate practitioner of learning and development for 20+ years in Asia and now has her own executive coaching company based in Hong Kong. With degrees in applied linguistics and adult education and additional training in coaching and intercultural communication, Linda coaches corporate leaders and facilitates senior-level meetings for firms in financial services, telecom, pharmaceuticals and other industries. Jean Brittain Leslie is the Manager of Product Development Research at The Center for Creative Leadership (CCL), where she studies the impact of multirater feedback and assessments on individuals, teams and organizations. In this role, she also designs research programs for CCL instruments and interprets the results. She is also an instructor in the Benchmarks® Certification Workshop and manages translations of CCL instruments into other languages. Jean has been active in CCL’s work on cross-cultural issues and derailment and is co-author of several reports, articles and book chapters on 360-degree feedback instruments,
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derailment and cross-national comparisons. She has an M.A. in sociology from the University of North Carolina at Greensboro. Fang Liluo is an industrial/organizational psychologist who received his education at Peking University and conducted postgraduate research at The Graduate School of Chinese Academy of Sciences, P.R. China. Interested in cross-cultural study and indigenous research pertaining to human resource management and social issues, Fang Liluo has advised various government institutions and corporations. He has published more than 80 articles and six books in these areas. Martha Louise Maznevski is Professor of Organizational Behavior and International Business at IMD International Institute for Management Development (Lausanne, Switzerland). Previously, she served on the faculty at McIntire School of Commerce, University of Virginia, and earned her Ph.D. from the University of Western Ontario. She teaches, researches and consults in the areas of cross-cultural effectiveness and managing global complexity. Morgan McCall, Jr. is a Professor of Management and Organization in the Marshall School of Business at the University of Southern California. Prior to joining USC, Morgan was Director of Research and a Senior Behavioral Scientist at the Center for Creative Leadership in Greensboro, North Carolina. Executive leadership, especially early identification, assessment, development, and derailment of executives, is the primary focus of Morgan’s research and writing. His books include Developing Global Executives: The Lessons of International Experience, co-authored with George Hollenbeck, and Advances in Global Leadership, Volume 2, co-edited with William Mobley, High Flyers: Developing the Next Generation of Leaders (winner of the 1998 Athena Award for Excellence in Mentoring), and The Lessons of Experience. After receiving a B.S. with honors from Yale University, Morgan earned his Ph.D. from Cornell. He is a Fellow of the American Psychological Association, the American Psychological Society and the Society for Industrial and Organizational Psychology. Sarah Parker has been working for Shell since 1995, first as Learning and Development Manager in Gabon, West Africa for Exploration and Production, and currently as Manager, Organizational Development and Learning (Global) in Chemicals Technology in Amsterdam, Netherlands. Sarah spent the 10 years of her career working in retail management. She then went to college and gained her Bachelors and Masters degrees in English and History, specializing in the 17th Century. She moved from this into adult education, studying for various teaching, training and management qualifications along the way, before deciding her future lay in organizational development and learning. After working with unemployed
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adults, she became a Staff Development Manager in the National Health Service, first in Wales, then in England. Sarah is currently in the final year of a Masters in Organisational Consulting at Ashridge Business School. Peter M. Ramstad is Executive Vice President for Strategy and Finance at Personnel Decisions International (PDI). Over the last ten years, Mr. Ramstad has held various leadership positions within PDI. As a result, he has had many opportunities to work first-hand with the core tools of business strategy, organizational effectiveness and talent development. Prior to joining PDI, Mr. Ramstad was a partner with a major public accounting firm focusing on financial, operational and systems consulting in high tech and service environments. He has undergraduate degrees in Math and Accounting with minors in Economics and Computer Science, and significant graduate studies in Economics, Mathematics and Accounting. He is a Certified Public Accountant, Certified Management Accountant and a member of the AICPA. Mr. Ramstad has formed two research partnerships with faculty from major universities (Cornell and Texas A&M) to study how people create value, and how that value can be measured. As a part of this research, Mr. Ramstad has worked with clients to understand and measure the financial implications of employee development and effective management. The models and tools for this process are known as Return On People™ . Peter B. Smith is a social and organizational psychologist who has worked for more than 30 years at the University of Sussex, U.K. He is the author of six books, including Leadership, Organisations and Culture (1988, with Mark Peterson), Social Psychology across Cultures (2nd ed., 1998, with Michael Bond) and more than 100 other publications. He is former editor of the Journal of Cross-Cultural Psychology, and from 2002 to 2004 is President of the International Association for Cross-Cultural Psychology. Elaine Sloan is Senior Vice President and General Manager of the Twin Cities Office of Personnel Decisions International (PDI). She has been helping global organizations design talent management systems and develop executive leaders for more than 20 years. She was PDI’s global practice leader for succession management and organization effectiveness services prior to her current role. She received her Ph.D. from the University of Minnesota, with specializations in both Counseling Psychology and Industrial/Organiztional Psychology. Paul T. Van Katwyk is an industrial/organizational psychologist educated in Canada and the United States who has consulted with leaders throughout the world. His consulting and research efforts have focused on the assessment, development and overall management of leadership talent within global organizations.
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He is currently the managing director for Personnel Decisions International’s operations in Greater China and resides in Hong Kong. Ling Wenquan is an industrial/organizational psychologist who received his education at Peking University and conducted postgraduate research at The Graduate School of Chinese Academy of Sciences, P.R. China, as well as The Graduate School of Doshisha University, Japan. Interested in cross-cultural study and indigenous research pertaining to human resource management and organizational behavior issues, Ling Wenquan has advised various government institutions and corporations. He has published more than 90 articles and 10 books in these areas. Emre Yucel is a doctoral student and research associate at Arizona State University. He earned a Master of International Business Studies from University of South Carolina in 2000. Mr. Yucel also holds a B.S. degree in Pharmacy from Istanbul University, and has developed a keen interest in healthcare management, strategic alliances, cross-border mergers and acquisitions, and other related international management research. He co-authored an article on the importance of social capital to the management of multinational enterprises, which was recently published in the Asia Pacific Journal of Management. Gary Yukl is currently a professor of management at UAlbany. He received a Ph.D. in Industrial-Organizational Psychology from the University of California at Berkeley in 1967. Dr. Yukl has written many articles in professional journals and is the author or co-author of several books. He is a fellow of the American Psychological Association, the American Psychological Society, the Society for Industrial-Organizational Psychology and the Academy of Management.
TABLE OF CONTENTS FROM VOLUME 1 PREFACE William H. Mobley
ix
INTRODUCTION M. Jocelyne Gessner, Val Arnold and William H. Mobley
xiii
PART I. CONCEPTUAL PERSPECTIVES INTRODUCTION M. Jocelyne Gessner and Val Arnold
3
TRANSCULTURAL GLOBAL LEADERSHIP IN THE TWENTY-FIRST CENTURY: CHALLENGES AND IMPLICATIONS FOR DEVELOPMENT George B. Graen and Chun Hui
9
GLOBAL LEADERSHIP COMPETENCIES FOR THE TWENTY-FIRST CENTURY: MORE OF THE SAME OR A NEW PARADIGM FOR WHAT LEADERS REALLY DO? John R. Fulkerson
27
GLOBAL LEADERSHIP: WOMEN LEADERS Nancy J. Adler
49
ALTERNATIVES TO INDIVIDUAL CONCEPTIONS OF GLOBAL LEADERSHIP: DEALING WITH MULTIPLE PERSPECTIVES H. Peter Dachler
75
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DEVELOPING GLOBAL LEADERS: A EUROPEAN PERSPECTIVE Tove Helland Hammer
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RECONCILING I/O PSYCHOLOGY AND EXECUTIVE PERSPECTIVES ON GLOBAL LEADERSHIP COMPETENCIES Richard J. Ritchie
115
A CORE OF GLOBAL LEADERSHIP: RELATIONAL COMPETENCE Barbara D. Clark and Michael G. Matze
127
PART II. RESEARCH PERSPECTIVES INTRODUCTION M. Jocelyne Gessner and Val Arnold
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CULTURAL INFLUENCES ON LEADERSHIP AND ORGANIZATIONS: PROJECT GLOBE Robert J. House, Paul J. Hanges, S. Antonio Ruiz-Quintanilla, Peter W. Dorfman, Mansour Javidan, Marcus Dickson, Vipin Gupta and GLOBE Country Co-lnvestigators
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WHEN EAST MEETS WEST: LEADERSHIP “BEST PRACTICE” IN THE UNITED STATES AND THE MIDDLE EAST Terri A. Scandura, Mary Ann Von Glinow and Kevin B. Lowe
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THE MORAL COMPONENT OF EFFECTIVE LEADERSHIP: THE CHINESE CASE C. Harry Hui and George C. Tan
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IN SEARCH OF THE EURO-MANAGER: MANAGEMENT COMPETENCIES IN FRANCE, GERMANY, ITALY, AND THE UNITED STATES Joy Fisher Hazucha, Sarah A. Hezlett, Sandra Bontems-Wackens and Amy Ronnqvist
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PART III. MANAGEMENT/ACTION PERSPECTIVES INTRODUCTION M. Jocelyne Gessner and Val Arnold
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LEADERS COACHING ACROSS BORDERS Mary Dee Hicks and David B. Peterson
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GLOBAL LEADERSHIP: THE INSIDE STORY Karen L. Otozo
317
DEVELOPING JOINT VENTURE LEADERSHIP TEAMS Zhong-Ming Wang
337
TECHNOLOGY IN EXECUTIVE LEARNING John Baum and Leland Russell
355
ABOUT THE EDITORS
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ABOUT THE CONTRIBUTORS
373
TABLE OF CONTENTS FROM VOLUME 2 PREFACE William H. Mobley
ix
INTRODUCTION William H. Mobley and Morgan W. McCall, Jr.
1
PART I. INTERNATIONAL PERSPECTIVES ON LEADERSHIP INTRODUCTION: INTERNATIONAL PERSPECTIVES ON LEADERSHIP: A LEOPARD IN THE DARK WOODS Morgan W. McCall, Jr.
9
A SERENDIPITIOUS SOJOURN THROUGH THE GLOBAL LEADERSHIP LITERATURE George P. Hollenbeck
15
TAKE ME TO YOUR LEADER Howard R. Crabtree
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TRENDS, DEVELOPMENTS AND GAPS IN CROSS-CULTURAL RESEARCH ON LEADERSHHIP Marcus W. Dickson, Paul J. Hanges and Robert G. Lord
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TRANSFORMATIONAL AND TRANSACTIONAL LEADER BEHAVIORS IN CHINESE ORGANIZATIONS: DIFFERENTIAL EFFECTS IN THE PEOPLE’S REPUBLIC OF CHINA AND TAIWAN Xiao-Ping Chen and Jiing-Lih Fahr
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LEADERSHIP IN CHINA: RECENT STUDIES ON RELATIONSHIP BUILDING Dean Tjosvold and Chun Hui
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LEADERSHIP AND THE PURSUIT OF STATUS: EFFECTS OF GLOBALIZATION AND ECONOMIC TRANSFORMATION Jone L. Pearce, Raul R. Ramirez and Imre Branyiczki
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PART II. LEADING INTERNATIONAL TEAMS AND ALLIANCES INTRODUCTION: LEADING INTERNATIONAL TEAMS AND ALLIANCES: CONNECTING THE LEOPARD’S SPOTS AT A DISTANCE William H. Mobley
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OVERCOMING TIME AND DISTANCE: INTERNATIONAL VIRTUAL EXECUTIVE TEAMS Laree S. Kiely
185
ALLIANCE LEADERSHIP: TEMPLATE FOR THE FUTURE Lynn A. Isabella and Robert E. Spekman
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PERCEPTUAL DISTANCE: THE IMPACT OF DIFFERENCES IN TEAM LEADER AND MEMBER PERCEPTIONS ACROSS CULTURES Cristina B. Gibson, Jay Conger and Cecily Cooper
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THE CHALLENGES OF LONG-DISTANCE LEADERSHIP: A VIEW FROM ASIA Alison R. Eyring
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PART III. DEVELOPING GLOBAL LEADERS INTRODUCTION: GROWING THE LEOPARD’S SPOTS: DEVELOPING GLOBAL LEADERS Morgan W. McCall, Jr.
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BUILDING A LEADERSHIP PIPELINE Charles J. Corace
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DEVELOPING GLOBAL LEADERS: TO HOLD ON TO THEM, LET THEM GO! Douglas T. Hall, Guorong Zhu and Aimin Yan
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ADVANCES IN GLOBAL LEADERSHIP: THE WOMEN’S GLOBAL LEADERSHIP FORUM Nancy J. Adler, Laura W. Brody and Joyce S. Osland
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CONCLUSIONS William H. Mobley and Morgan W. McCall, Jr.
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ABOUT THE EDITORS
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ABOUT THE CONTRIBUTORS
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TABLE OF CONTENTS FROM VOL. 1
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