My Cultural Stereotypes OK, Your's Not OK

Whenever I visit Asia, it never ceases to amaze me how many of the regional operations of European and US companies are managed by people from the parent company's domestic market. The arguments for this that I hear are usually of the, 'We cannot find the local talent' or 'We need to ensure consistency of parent company culture and processes around the world', variety. However, given that many Asian owned companies operating in Europe or the US reflect the same phenomenon in reverse, the argument over lack of local talent seems a little weak.

These days all markets are a mix of local and global, but it is the local differences that represent a huge opportunity for differentiation, as well as the need for thinking that goes beyond the presumptions developed in the parent company market.

Undeniably, there will be challenges in persuading local talent to join a foreign brand, unless it has the kudos (and willingness to pay above the going rate) of a Goldman Sachs or suchlike. However, being a suspicious type, I'm guessing that there is also an underlying cultural parochialism at play, which results in a preference for the use of home grown expatriates, despite the huge costs involved. Cultural differences in problem solving, selling styles, business relationships, and languages are seen as frustrating complications, rather than opportunities to increase effectiveness. One senior manager of a services company recently complained to me that they could not find decent sales folk or senior management in their East Asian markets because local candidates tended to lack aggression, creativity and leadership aspirations. That's quite a list of things for a nation to have in short supply. Any country that has been involved in the trade of goods and services for centuries probably has a reasonable number of people who know how to chase a deal or think new thoughts or organize others, albeit they may do it differently from the way it's done back home.

Research on cultural stereotypes tends to fall apart somewhat once you get beyond the obvious extremes of the collectivist (e.g. Japan) and individualist (you can guess) cultures. Individual differences so often outweigh the effects of broader cultural differences, that we need to get better at dismissing stereotypes. The reality: different management and working styles are effective in different markets. So let's raise a glass to the wonders of diversity and give a thumbs down to cultural presumptions. Try harder to understand the different models that can lead to success in different markets, be more persistent in seeking out local recruits and maybe take a little more risk along the way. It really doesn't sound like more than we would expect of someone entering our own domestic market.

Compassionate Capitalism?

There is a whole industry devoted to trying to figure out if companies that treat their people well do better over the long run than those who apply themselves less assiduously to this saintly cause. It's quite fascinating how much attention is given to this subject, particularly in the U.S. where we have the double whammy of a political system that provides relatively paltry social safety nets compared to many other developed economies (particularly continental Europe) and a business culture that is immensely, ahem, 'flexible' (i.e. layoffs are a common early response to any downturn in revenues).

One book, Firms of Endearment does a nice job of making the case for the linkage between looking after your people and financial success, but it's notable that of 28 companies that made the 'Final Cut', only 4 of them hailed from outside the US, presumably as a sop to non-U.S. readers. Oh please, are we really saying that in a world as globalized as ours is these days, we cannot do a better job of recognizing that we might do well to learn more about what others are doing, and spend a little less time on comparing and contrasting what is happening inside one, albeit major, part of the world economy.

So, it's nice to see some recognition that companies outside the US with a focus on the welfare of employees do actually exist. In the NY Times on Sunday an article described a German machine tool manufacturer, Trumpf, that tries very hard to avoid layoffs during hard times. They don't always succeed, but they do try any number of creative alternatives before resorting to layoffs, including banking overtime hours during good times that can be called upon during tough times. Of course, Trumpf exists in a system that is the direct opposite of the US: in Europe, government supported social safety nets are substantial and employment law makes it hard for companies to layoff people unless they have a powerful case for doing so.

In the seventies we used to obsess about Japanese management systems, with many companies paying substantial amounts to learn about the Toyota Production System or something similar, but there seems to have been much less interest in hearing about, for example, the Scandinavian versions of social capitalism that have been so successful or about the strength of the German Mittelstand, or the effects of Confucianism on the success of many Asian companies.

Notwithstanding the different political and social choices that societies east and west make that result in these different systems, with long term unemployment creeping ever higher is this not the perfect time to broaden our horizons and look more deeply at the choices we make and revisit the question of the role of a company in society, it's obligations to the communities on which it depends for it's success and, indeed, our definitions or what constitutes 'success'?

How Large Should Your Management Team Be?

When someone asks me the question 'How many people should typically be in a senior management team?' or some variant thereof, it generally seems to mean that they already have a point of view for which they want to find a justification. Either they think that the team is too large, or they want to argue the case for enlarging it. Why is this almost always true? Because the people asking the questions are, by and large, smart and experienced executives, and with a moment of thought they will know that the answer is a huge 'It depends'.

The problem is that any benchmarking data you find will almost certainly come with so many hedges that it raises far more questions than it answers. The hedges will require you to answer questions such as: what kind of business are you in, are you global, what scale of revenues/ profits are you managing, how many employees are there, how complex is your business model, etcetera, etcetera. Even after taking into account these variables, you will find that the variance across different companies is substantial. So, the best you can hope for is that you will land on a range that is so wide that it allows you to be happy with any answer that you choose to come up with.

So, if my initial contention is correct, the response to the question of team size should be 'What do you want the answer to be?'. This, of course, will not get you far, but it does save a lot of time if you know what you want to do regardless of any alternative possibilities. The more appropriate question would be 'What problem are you trying to solve?'. The real point here is that you should figure out what you need in order to get the work of the company done, minimize organizational inefficiencies, provide roles for the talent you want to keep at that level, and reflect your organizational values. This should be done through some serious internal analysis and thought, rather than relying on any false confidence provided by an external and relatively superficial rule of thumb.

In any case, whatever benchmark data you see will still leave you with some serious analysis and thinking to do. So, if my experience is anything to go by, you should save yourself the embarasment of generating (or paying for) a lot of data that will be ignored once you get past the 'Hmm, that's fascinating, but what does it tell us….' phase.

Having said all this, for those who still hanker after the data, some useful work was done by Ashridge Strategic Management Centre (UK) in 2000. Also, the Saratoga Institute is often used as a source. And, fear not, there are many more sources out there for those that enjoy the journey at least as much as the arrival.