Long-term development plans of a German multinational in the USA

Case 2.2 Long-term development plans of a German multinational in the USA

A German firm had developed its activities in the electrical industry in the USA for two years and the Chief Executive Officer (CEO) Peter Hansen was happy with their current performance: market share for important products had increased significantly and progress was better than expected. The number of employees had increased, including quite a few local American managers in high-level management positions – a situation which was rather unusual for a subsidiary of a German multinational in its early stage of development. The CEO’s goal from the beginning was to avoid an ethnocentric approach to the American activities of his firm and to take a polycentric approach that supported recruitment of local managers.

One of these US local managers was John Miller, the marketing director of the company. During the last two years, he had been thoroughly prepared for his job. The company had sent him to various high-level training programs at top business schools and had provided him with a long-term career plan, which included short-term vertical career advancement. While Peter Hansen wanted to support the development of an American manage- ment style, he nevertheless tried to transfer some HR practices which are highly valued in Germany – particularly investing in training and taking a long-term intraorganizational career perspective. While some US firms took this approach, these ideas were not as widely accepted in the USA as in Germany. However, Peter Hansen assumed that these policies would be valued by the new US employees of the firm and would provide an important incen- tive for employee retention.

One morning, Peter Hansen was shocked to learn that John Miller was about to quit his job. A competitor had offered John a challenging position – in large part because he had systematically built up his knowledge and experience base, supported by his German employer. How can you interpret Peter Hansen’s surprise from a cultural point of view?

Discussion Questions:

1Relate the described situation to one of the cultural dimensions identified by Hofstede. Can you explain Peter Hansen’s surprise using this theory?

2How does this situation compare to comparable situations in your home country? What are the limits of a cultural explanation?

1. Case 2.3 Female careers in various environments

Elisabeth Harstad was employed as a trainee at the Norwegian risk management consultancy DNV when she realized that being a woman was a barrier. Although trainees were supposed to go abroad, the company had problems finding a job for Elisabeth in a foreign subsidiary: “I wanted to go to London, Houston, or Singapore. In the end I managed to get an international assignment from Oslo to Copenhagen”.

This was in the 1980s. However, Elisabeth Harstad did not give up and energetically pursued her career. She is now the manager of the research and innovation unit at DNV, and since 2006 a member of the board of directors of the large Norwegian chemical company Yara. When the new members of the board of directors were elected, for the first time it was an advantage for Elisabeth to be a woman. Since 2008, Norwegian companies are required by law to have 40 per cent female members of their board of directors. Thus, Elizabeth is part of an experiment – if women do not make it to the top on their own, politics support this process in Norway.

Discussion Questions:

1Relate the situation in Norway to one of the cultural dimensions identified by Hofstede. How can you explain it?

2Can the rules for quotas of female managers be applied in other countries as well? What are the advantages and disadvantages?

2. IHRM in Action Case 2.4 Meeting on a Friday in Kenya?

Our building company had finished an important project concerning a new major road in Kenya. However, the company had not been paid for all of the completed work. The managing director of the Kenyan subsidiary of the building corporation organized a meeting with a representative of the relevant Kenyan government agency.

The meeting started and the representative was very polite and friendly. However, at the same time he also seemed to be quite nervous. Every few minutes he received a telephone call or had to initiate a telephone call himself. All tele- phone discussions were carried out in the local language. Despite the interruptions, I tried to explain the reason for my visit – the outstanding account balance. Of course, the government representative apologized for every interruption. However, after 15 minutes we were both very tense because the conversation had not advanced at all.

Eventually I said that I was sorry that my counterpart had so much to do and asked for another meeting next Tuesday. Instantly the government representative was relaxed again and happily confirmed the new meeting. Now he could finally concentrate on the preparation and organization of his big family meeting that weekend, which is typical for large Kenyan families.

Discussion Questions:

1Relate the described situation to one of the cultural dimensions identified by Hofstede. How can you explain it?

2How does this situation compare to comparable situations in your home country? What are the limits of acultural explanation?

3. Case 5.1 International headhunting

Peculiarities occur in the selection process when external service providers are assigned to undertake the search for international managers and are involved in the subsequent selection. Whereas in the scientific literature there are hardly any discussions or ideas presented addressing this topic, in practice headhunting is a commonly used method to fill international positions. According to Hewitt’s HR Outsourcing Survey, which includes more than 100 US companies, these companies pursue four central aims with the transfer of most (national and international) HR activities to external service providers. Accordingly, most of the companies surveyed (65 per cent) indicated they want to reduce costs by outsourcing activities. Furthermore, access to external expertise is attractive to many companies, as well as improved service quality and the possibility to more intensively direct internal resources to strategic HRM. With reference to outsourcing IHRM, the survey reveals that 43 per cent of the companies revert to the expertise of external service providers for expatriate management matters and 56 per cent in repatriation issues; 3 to 4 per cent of the companies even plan to outsource these areas in the near future. Concerning recruiting, 10 per cent of the companies surveyed indicated that they already assigned their recruiting to external service providers; an additional 6 per cent definitely plan to outsource their recruiting. As there are no explicit figures available, one can only speculate how many firms make use of outsourcing for their international employee selection as well. However, the specialization of numerous headhunting agencies and management consultancies in the area of IHRM and executive search for international managers indicates a high demand in these areas.

An example is the management consultancy ABC Asian Business Consultants from South Korea. Not only does it support companies from different branches in the search and selection of qualified managers, it also assists firms in organizing international management training or international career planning. Currently, seven employees and 15 trainers work on international projects at the company’s offices in Korea, China, India, and Germany. Every year, about 15 employee-selection projects are completed by ABC Asian Business Consul- tants. Headhunting selection criteria and job profiles are adjusted to the needs of the recruiting company and the requirements of the vacant position. Due to the high degree of candidates’ qualifications and confidentiality of information, the selection process is very complex. First of all, potential candidates must be identified and personally contacted. Alternative forms of HR Marketing (for example, activities involving Internet-based plat- forms or social networks) are not used because of the need for confidentiality. Often, a cover story is used to identify qualified candidates, seek further information and evaluate interest. Before the first contact between the candidate and the recruiting company takes place, the candidate’s curriculum vitae is evaluated, followed by two interviews with representatives of ABC Asian Business Consultants. Interviews via software programs such as ICQ, Skype or Windows Live Messenger may be used occasionally to bridge long distances and to conduct the interviews without national or international relocation. Based on the protocols of the interviews and the application forms, a short report on every candidate is compiled and a shortlist of the most qualified candi- dates is presented to the recruiting company. Ultimately, final interviews with the candidates are conducted by employees of the recruiting company, before a final decision on the filling of the international position is reached. The whole selection process may cover a period of several months. Occasionally, international assessment centers are organized using different methods such as individual presentations, role play, or presentations to the board of directors.

Based on his past experience, Dr Ulrich Hann, owner and Chief Executive Officer of ABC Asian Business Consultants, can identify cultural differences and differences in the qualifications of candidates from diverse inter- national backgrounds. Differences depending on the respective nationality appear, for example, in the personal contact during the selection interviews. There are also differences regarding the professional qualifications and skills of candidates. Many Indian candidates have a very high level of qualifications in natural sciences, while there is a strong demand for German candidates with a degree in mechanical engineering.

There are particular challenges for HR consultants in a dynamic international environment. Dr Hann notes: “Similar to the requirements for the candidates, the requirements and criteria for a qualified HR consultant in the international business environment are also high”. Notably, multilingualism is important to understand the needs of the customers and those of the candidates. In addition to a professional qualification, entrepreneurial thinking as well as international work experience are essential requirements to find a position in a recruiting company as an external service provider for IHR.

4. IHRM in Action Case 5.2 Role playing: Intercultural competence 

You have been assigned to Mexico for a two-year international assignment. Your task is to support the development of a new subsidiary. During the first weeks of your stay in Mexico you experience again and again that your Mexican employees as well as your suppliers and customers are never on time. Now you are sitting in a restaurant and waiting for the Sales Director of one of your Mexican suppliers. Your meeting was at 12.30, but it is already 13.00 and the person you were waiting for has not shown up. As you have another appointment at 13.30 you ask for the bill, still hungry! Exactly at this moment the Sales Director shows up – half an hour late. How do you react? What reaction do you expect from your Mexican partner? Which reactions would be interculturally competent and which would not be?

5. IHRM in Action Case 6.1 A rainy expatriate performance appraisal Richard Hoffman,

a Québécois chemical engineer working for a Canadian-based energy firm, was given a three- year expatriate assignment in Venezuela as a technical liaison and environmental protection project manager. His local project supervisor was Jean, a French engineer who had lived in French Guiana and then Venezuela for over 20 years. Richard thought that, as a Francophone from Quebec, he and Jean would be able to build a quick working relationship. Rich sent Jean an early email (in French, and not the usual corporate English) containing what he thought of as the five most significant goals associated with his assignment – similar to the management- by-objectives section of the more or less standard performance appraisal forms he had filled out for years during earlier assignments in Edmonton, Toronto and at corporate headquarters in Montreal. After several months with no response from Jean, Richard caught Jean in the hallway between meetings and asked him about the email and his progress to date. “Don’t worry about that”, Jean responded blandly. “Just keep working to the deadlines and I will check with your co-workers and the other project managers on your work. Where did you go to engineering school, by the way?”. Richard waited another six months and was becoming increasingly anxious as the firm’s annual review week approached. He finally caught up with Jean on a rainy Friday in the lobby of the office building as they both waited for their drivers to arrive. When asked about the upcoming performance review, Jean snorted and said, “C’est tout fini, it’s all been taken care of. Make an appointment with my assistant, Louisa, next week and we can go over the report we have sent to Montreal”. As Jean stepped gingerly into the rainy Caracas parking lot, Richard thought back to the last few weeks with his team, the sometimes loud disagreements with his fellow project managers, and wondered if it was too late in the day to call his old supervisor in Toronto.