Is Your Company Truly “Global” or Just Pretending?
Guest post by David Everhart, President, Aperian Global.
In 2015 everything seems to be “global.” There are global brands, global teams, global business units all directed by globe-trotting global leaders with global mindsets.
I work with a large number of multinational organizations that all aspire to be “global.” Most of these firms have their headquarters in North America or Europe, are disciplined, have world-class technology and processes, but do not provide equal opportunities for non-Westerners. In my experience, this rarely represents a deliberate attempt to keep the leadership roles mono-cultural, but rather is a system-wide unconscious bias that has created inequities over many decades.
Case in point: I was in an informal meeting recently with several senior leaders of one such U.S.-based company. They were speculating about who would be selected as the next Chief Learning Officer (global head of learning and development). The person who had long held that position had just retired. I asked why the company didn’t move the position to Asia-Pacific, the region which has, by far, the greatest need for talent development. The group of leaders chuckled and said “We are not ready for that yet. It would be too much of a stretch.” Hmm… “Why is that?” I innocently asked, “The business case is pretty obvious: if two-thirds of your global sales are projected to be in Asia-Pacific within ten years, but 95% of your global leadership roles are still in the U.S. and Europe and populated overwhelmingly with Westerners….. (even your Asia-based leadership roles are 90% held by Westerners) shouldn’t you move quickly to create a more diverse leadership team that matches your business needs?” Uncomfortable silence paired with thoughtful faces followed.
What does “global” actually mean? How do you measure “globalness”?
In business, one can look at the percentage of revenue, assets, and employees outside of the firm’s home country. In their recent article entitled “How Global is Your C-Suite?” (MIT Sloan Management Review, Summer 2015) Pankaj Ghemawat and Herman Vantrappen report that within the Fortune 500, natives of the company’s home country dominate the power structures. According to their analysis, only 13% of the Fortune Global 500 had nonnative CEOs in 2013. When extended to the full management team, the percentage of nonnatives rises to a whopping 15%. In other words: the people at the top look pretty much like each other and not much like the markets they are counting on for current and future growth.
Until the mindset of what global talent development really means changes, it may be difficult to make fast business progress. The native-born employees of these critical future markets may not feel like working for these companies. As Ghemawat and Vantrappen say: “If a large share of a company’s assets, sales, and employees are located outside of the home country, yet it consistently chooses top leaders who are natives of its home country, that signals limited long-term career prospects for foreign middle managers already in the company as well as for potential hires.” The interest of talented Chinese nationals to work in MNCs versus domestic Chinese firms, for example, dropped by 50% in 2010 compared to 2007.
Attracting and retaining global talent
In Global Fortune 500 firms with a foreign CEO (currently only one in eight), 45% of the management team is also non-native. These firms will look a lot more inviting to talented future leaders from a diverse set of fast-growth markets. If I’m Indian, Turkish, Nigerian, or Brazilian and can see someone from my country sitting on the global leadership team (or the Board of Directors), I know that it is possible for me to advance. These firms, if they manage their “employee value proposition” skillfully will enjoy a significant long-term advantage in attracting and retaining talent.
I have worked closely for the past several years with an executive from a very large U.S.-based manufacturing firm. She is from Asia-Pacific and has watched Western executives come to her region over the past decade by the hundreds to run high-growth markets like China, India, Thailand, and Indonesia. After three years (on average) these expatriates return home into upwardly-mobile positions. When talented Asian managers are considered for roles that might replace one of these Western imports, this firm usually goes with another “import.” Why? In their eyes, it is safer to put a “known” leader into a key role rather than “taking a risk” on promoting an unproven (and unknown to headquarters) “indigenous” leader. Recently my talented friend decided to leave her U.S. company, where she’d worked for nearly her entire career. After years of observing the same ritual, she concluded that she would never be given the same opportunities as her American counterparts. Perhaps her old employer will wonder why she left. I am wagering they will back-fill her position with another “import.”
David Everhart currently serves as President of Aperian Global. David conducts leadership development programs, intercultural management assessments, and executive coaching assignments for American, Asian, African, and European management teams at multi-national firms across multiple industry sectors. Connect with him on LinkedIn.
Be sure to check out the newly released book, Leading Across New Borders: How to Succeed as the Center Shifts Learn more about the book and download a free chapter here.