Financial Times: Global Souls to Run Global Company
23 March 2006
William Barnes, Financial Times
Managers at international businesses must expect to move country regularly. Could this help create a class of cosmopolitan, constantly mobile workers?
Nick Leeson, the legendary destroyer of the 233-year-old Barings Bank, was by his own admission naive, immature and unworldly when he was working in Singapore in the 1990s.
Left unsupervised he secretly ran up £830m in trading losses before he was discovered. Barings was subsequently sold to a Dutch bank for £1.
Raw pride and a reluctance to admit that he was failing stopped him telling anyone about his rapidly climbing losses, he explained in a recently published book.
Mr. Leeson did not claim to be discombobulated by working in an alien environment, indeed he enjoyed the tropical social life. But he has said that if he could put the clock back, he would not have got on the plane to Singapore.
How many of today’s budding global warriors will end up wishing that they too had not “got on the plane to Singapore”?
Until a few years ago the expatriate executive was widely understood to be someone acquiring a building block of career experience that would benefit him or her and the company.
In the last few years the spread of globalization has reached the point where businesses in global markets now expect their managers to relocate with few guarantees for the future on either side. Increasingly these move-able executives will be Asian, particularly Indian and Chinese, as regional domestic Giants reach out into the world.
The old-style western expatriate has not always been appreciated. The 19th century British Prime Minister, Lord Palmerston, said that when he required advice in handling a foreign country he would ask a 20-year expatriate for his opinion and then do the opposite.
But at least in the 19th century working overseas was considered a high risk gamble at best or akin to taking holy orders. It was rarely – as today – deemed ordinary and easy.
In external appearance most modern businesses, superficially shaped by similar management solutions, tend to look familiar. But the reality is that diverse cultures, histories and stages of development make the intramural corporate experience very different, at least in emerging economies if not everywhere.
Western executives are increasingly attracted by the monetary and intangible rewards offered by ambitious Asian groups. At the same time, established global businesses blithely talk of building up diversified multinational managements made up of staff holding a variety of different values and attitudes.
“Some people love the speed of it, the variety and excitement and the opportunity. But there are others who really don’t welcome this and do not relish what’s going on,” says Edwin Sim, managing director of Human Capital Alliance, a consultancy.
“You have to know what kind of person you are. Modern management is tricky enough in one’s own culture. You need energy, flexibility and a certain toughness to do it in another country,” he adds.
Conventional academic preparation might help an executive avoid becoming another Nick Leeson (who had no formal training), but will probably do little on its own to unravel exotic business practices.
India may be poised to overtake the US as the world’s biggest producer of MBAs, but that doesn’t mean a foreign MBA will be able to spring open business mysteries that remain as delicately localized as they ever were, says Jane McKenzie, professor of management knowledge and learning at Henley Management College in the UK.
“That’s not the way education works. We provide a set of business tools and logical rigour. Ultimately our students have to take what is valuable for them out of the course and adapt that for local conditions,” says Prof McKenzie. “Anyone who claims paper qualifications are a panacea is a fool or a charlatan.”
Academic research has unsurprisingly found that expatriates with the most positive and flexible attitudes flourish best. A PwC Study discovered, less obviously, that almost two-thirds of foreign assignment failures were blamed by companies on the mismatched expectations of their executives.
Manifold factors can cause a clash between an expatriate’s pre-arrival assumptions and the reality, some only tangentially related to the work culture, such as climate, isolation or problems with a spouse.
Findings like this have encouraged some experts to conclude that a cosmopolitan managerial class, effortlessly confident in a multinational environment, must emerge to serve global business. Some argue that tomorrow’s managers will be “global souls” who habitually dabble in multiple cultures, to use travel writer Pico Iyer’s phrase.
The management pundit John Adams has suggested that such future internationalists will evolve while accompanying their parents on overseas postings.
So is a self-perpetuating managerial class destined to run global business?
Perhaps not. Languages and international experience are valuable but not everything, says Anders Lundquist, managing director of Bangkok-based headhunter Pacific 2000. “If an executive is at ease with himself, confident in his expertise and willing to adapt, he can go far. It’s a matter of character and energy, as it always has been,” he says.
A recent study by Erasmus University, Rotterdam, found that if a manager could survive the first six months in a foreign country without undue strain, the chances of eventual success were high. If, however, the shock of arrival was not quickly controlled, executives often became demoralized and foundered.
“The world is everybody’s oyster in the longer term,” says Prof McKenzie. “When logistically there are no management barriers left, we will be left with cultural differences.
“Whoever manages the space between these cultural differences is doing something important.