Author: Charlene Solomon

The numbers practically sizzle off the page. Just look at this: U.S. direct investment abroad skyrocketed from $467.8 billion in 1991 to more than $796 billion in 1996, according to the U.S. Department of Commerce. U.S. corporations have invested more than $10 billion in China alone, another $23.6 billion in Brazil, $16 billion in Thailand and $12.5 billion in Indonesia. Many of these hot markets are growing at a robust GDP (gross domestic product) of 7 percent, or 8 percent a year.

One after another, American companies seek — and seize — new opportunities in rapidly growing yet unfamiliar markets. China, India, Brazil, Russia and many others offer untold opportunities with their megamillion populations and growing consumer classes. And U.S. firms are right there, offering everything from light bulbs to power plants and selling their expertise about manufacturing, marketing and managing global operations.

The ventures into these new territories can be profitable. But, they also can be risky. New entrants must navigate gingerly over a hotbed of coals that will singe those who are unprepared for myriad laws and regulations, unfamiliar political and social structures, and unpredictable infrastructures, all of which manifest themselves in workforce issues. That’s why HR’s role is central to strategizing, planning and ultimately helping to choose new business destinations.

It’s clear that the critical issues to success in new markets often revolve around typical HR concerns: hiring, training, compensating and managing people — but in a multiplicity of environments and a maze of legal and political circumstances. These are complex and multilayered business issues, to be sure, but they are, nonetheless, issues that require understanding and thorough business, labor, legal and social analysis through an HR perspective.

HR must participate in a business analysis of proposed locations.
“We increasingly see whole new industries going out — information technology, telecommunications, specialized pharmaceuticals, agriculture, insurance — and we’re also seeing companies that have been established internationally for many years going into new markets,” says Bill Sheridan, director of international compensation services at the New York City-based National Foreign Trade Council.

Sure, there’s money to be made. But what makes global executives choose certain destinations as most receptive or at least worthy of the difficulties firms must surmount? The decision must always begin with the business objectives.

“Before we venture into new markets, we now start with a detailed strategic market analysis. We look at our markets over the next five to 10 years and try to determine where we need to be in four or five years’ time,” says Patrick Morgan, human resources manager, Latin America Region for San Francisco-based Bechtel Corp., the construction giant. “It’s important to actually think through what it is you’re going to do, where your market is, what your relative chances are of being successful, and then begin to prioritize where you want to go after that.”

Morgan is always a key member of the management team that assesses the big picture. The cost-benefit analysis factors in: the position of competitors, infrastructure as it relates to personnel (such as telecommunications), regulatory and trade barriers, and the tax situation (both corporate and individual). Ideally, the new market would be a country where there’s an untapped need for your products or services; a quality, skilled labor pool capable of manufacturing the products; and a welcoming environment (governmental and physical).

Are there such countries? Indeed, each has its pluses and minuses. While Singapore has an educated, English-speaking labor force, basks in political stability and encourages foreign investment, it has a small population. While Mexico shines as an excellent example of a country that has aggressively lowered its income tax rates (from 60 percent in 1988 to 35 percent today) and attempts to alleviate other governmental hurdles in an effort to attract foreign investment, it has severe pollution. Many countries in Eastern Europe possess an eager, hungry-to-learn labor pool, but their infrastructures create difficulties. And, while India holds enormous promise, conducting business there is complex and difficult.

India’s promise lays in its attributes. According to “Venturing in India: Opportunities and Challenges,” a 1996 Conference Board report, India’s impressive economic reforms have made it quite attractive for corporate investors. Because of its British roots, it has a strong legal system, developed technology and a growing financial sector. Known for its well-educated workforce, world-class scientific, engineering and management talent, and business schools that churn out excellent job candidates, India offers a labor pool that values education.

These positive attributes can be outweighed by potentially negative ones, however. India has an inadequate infrastructure, for example, with problems such as frequent power outages and crowded, unpaved roadways. And most daunting is India’s political environment and highly bureaucratic and protectionist government that stir the flames of anxiety among multinational business leaders. For HR, the Indian business environment requires adroit management of people amid mountains of regulations.

For instance, the government wrought havoc with Houston-based Enron Development Corp. for five years. Enron (along with Bechtel and General Electric Co., both of which had been successful in India with other projects) was in the midst of building a $2.8 billion power plant. It was the first foreign-owned power plant in India and one of the largest foreign investments ever. When a new regional government was elected, officials shut down construction of the plant and entangled the company in a judicial quagmire of 24 lawsuits for 16 months. Knowing situations such as these are probable, HR must determine which issues (staffing vs. regulations) are more compelling.

Consider the quality and availability of the local labor force.
The greatest challenge in entering a new market is often the workforce, specifically, senior management. “After you determine that you have a marketplace that’s going to utilize what you’re producing, you need to see if there is the capability and talent in the local workforce to support the endeavor,” says Richard Bahner, human resources head at New York City-based Citicorp. “You really need to do a total balanced evaluation. Some of these places offer less-expensive labor, but if they don’t have the capabilities you’re looking for, it may not be a savings because you’ll have to supplement it with a large amount of computer support, training or expatriates.”

The extent of the staffing challenges depends on your industry. “If you’re distributing Pepsi (TM), you can manufacture it locally and teach people how to sell it easily enough, but if you’re in global banking, you’ve got a lot more restrictions,” Bahner explains.

Citibank has experienced this in the Asia-Pacific region. With relationships in China and Hong Kong for almost a century, it had an advantage when it looked to expand into Indonesia and Thailand. But it was hampered by the need for an educated workforce. Citibank developed the market in Indonesia and taught the people about electronic banking — eventually generating millions of Citibank Visa cardholders. But the HR issues were daunting.

“The biggest problem is the dearth of qualified locals,” says Bill Fontana, formerly of Citibank in Indonesia and now vice president of international HR for the National Foreign Trade Council. It’s a big, big problem. There are so few qualified people who can take senior positions (among 200 million Indonesians), that other U.S. companies will bid for this unique individual. “It jacks up the cost of your senior local person, and then you begin to pirate people away from other companies because they speak English, they’ve worked at another multinational organization, and therefore, you would pay almost anything to get them onto your payroll. It leads to spiraling inflation in the workforce.”

As an example, Fontana was recruiting for a treasury head at Citibank in Indonesia. The position was staffed with an expat, and he wanted to fill it with a local. It took more than one year to identify a qualified person. Citibank offered the man $150,000 and a guaranteed base of $100,000. “He turned me down,” says Fontana. “He told me that the Bank of Bali was offering him more money! And the expatriate was only making about $115,000.”

The situation is similar in other parts of the region. Experienced, multilingual Thais and Taiwanese can look to their talented colleagues in Hong Kong and China for ways to bid-up their going wages. As these countries develop, the competition for talent is becoming ferocious. Local companies are vying with foreign firms for the same employees.

One obvious solution is education. In addition to the traditional training that internationally experienced firms such as Motorola, Coca-Cola and McDonald’s have conducted for years, there are now joint ventures between universities and businesses. For instance, Baltimore-based Johns Hopkins University has paired with Nanjing University in China. Based in the city of Nanjing, 100 students each year participate in a bicultural business program and living experience (a Chinese and an American student are roommates) that prepares them for senior-level management positions.

The receptivity to education varies by location. Eastern Europe is different from Asia-Pacific. “The work ethic is very strong, and equally important, there’s a strong interest in learning,” says Fontana. “When we went into Eastern Europe, the question [from employees] was, ‘When do I get my next training course?’ The thirst for training and knowledge is staggering.” Training can rarely keep pace with need.

Evaluate laws and regulations.
The next thing you need to think about is whether the government has created an environment receptive to foreign businesses. The question is: Do the laws enhance or inhibit the chance of success?

No matter where in the world your company ventures, as economies develop and competition increases, local companies become stronger, and they often exert pressure on local governments to tighten regulations regarding foreign firms. For example, work permits for expats aren’t as easy to obtain in many parts of the world as they once were. Mandated workforce practices can either aid or decrease your company’s opportunities. Labor law and its effect on compensation and benefits requires research and comprehensive understanding.

One of the first questions must be: How restrictive is the labor law? “As an example, generally, in countries where the British flag has flown, the labor code is simple, straightforward and employer-friendly. Where the Napoleanic code has predominated, you find labor legislation that’s complete, complex, confusing and expensive,” says John de Leon, regional director of international HR consulting services for Deloitte & Touche LLP, based in Wilton, Connecticut. “In Asia-Pacific, generally speaking, labor law (although very different from the U.S.) isn’t as restrictive and permits companies greater freedom to make decisions.”

These restrictions refer to the presence of work councils that get involved in activities Americans would consider purely management decisions. They may restrict part-time and temporary employees. They will have provisions that affect termination. For example, in the United Kingdom, although there’s a cost associated with terminating employment, it’s far less expensive and less complicated to calculate than in most parts of Latin America.

You can’t assume you’re operating with a U.S. frame of reference. In many countries, the labor code includes a concept called acquired rights. The code says you can’t take away anything from an individual. So, for example, job content, responsibilities, pay and benefits must remain constant. Another concern is strong labor unions. And, still another difficulty is that many rapidly growing countries spur growth by being less restrictive when a company enters the country to set up business. “It’s at the back end where you get a lot of intervention,” says Fontana. “I let go of nine people in Indonesia at a cost of $1.2 million in severance pay.”

And then there’s compensation and benefits. Social costs, medical-care costs, pension and social security costs differ greatly from one country to another. And often, the ways in which salaries are quoted and designed are significantly different. “Until recently, India capped the base salary for executives at a pretty low level in hard currency because of the socialist mindset,” says Sheridan. “So, firms offered myriad allowances — cars, drivers, servants, clothing. American companies saunter in and want to roll it all into one basic salary, and they aren’t seeing the other factors involved.”

In other words, if you aren’t discerning, country-specific labor laws and regulations can begin to eat severely into profits. Or, if you’re not careful, you may get burned because you’ve unwittingly trespassed legal boundaries.

Ask yourself, “How hospitable is this country to the business?”
Beyond the more narrowly defined and obvious HR issues, receptivity and overall friendliness to foreign business are major factors in selecting a destination country. How protectionist is the environment? What types of bureaucratic, regulatory and economic constraints exist? Is there political tension or security risk? Corruption? A workable legal system? Economic stability?

All of these issues complicate the ability to staff your operations. For instance, if your company faces political security risks, how will that affect the expatriation of employees? If it’s a highly bureaucratic and regulated country, what will that do to your ability to hire and fire employees? If there’s gross corruption in the local business environment, how will you train your staff to handle the situation?

How do all these elements interact? Latin America, for example has always ranked prominently in international operations for Farmington, Connecticut-based Otis Elevator Co. Worldwide. The company had maintained escalator factories throughout Latin America at one time, and then it consolidated most of the operations in Brazil (as well as small operations in Argentina and Uruguay). “Even though the business climate was kind of ‘iffy’ because of the hyperinflation (at the time), we chose Brazil because we were still making money. We had invested in a factory; we had a good relationship with the government so we could repatriate funds, and the labor market was good,” says Jim Defau, director of compensation and benefits for the firm. “Overall, it’s a conducive environment for doing business.”

Defau explains that a receptive government provides a foundation from which to start the assessment of the business climate. The intangible quality of hospitality is a mixture of distinct factors. Is the legal and ethical environment one that your company can handle? Is the location a place that will attract or repel managers and workers from other countries? Will the government help or hinder your day-to-day concerns? Overall, is the country a place where all the factors combine so you’ll be able to help your employees do the best job for the company and where your company can thrive?

Success depends on so many elements. It requires more skillful management of every aspect of the organization when you edge into new markets. There are so many hot spots and fumaroles, and the unprepared will surely get burned. HR is part of the holistic picture. “The functional silos that once existed are no longer in place. We’re all business partners — HR, legal, finance, engineering, and, every aspect of the business affects every other aspect,” says Defau.

If ever HR was core to business success, it has never been more obvious than in the pursuit of these active, hot markets.

Global Workforce, January 1998, Vol. 3, No. 1, pp. 12-22.

There’s a lot about the Swedish culture that’s comfortable to Americans. One reason is that U.S. pop culture has significantly influenced Swedish society, making Sweden one of the more Americanized European countries. But delve a little deeper and some interesting differences surface.

In cross-cultural encounters, the people of two nations are likely to find more similarities than differences between their cultures. But problems arise when they don’t anticipate the differences, and they don’t have the skills to bridge cultural gaps once they bump into them. Not surprisingly, this can have serious implications in the business world.

Achieving cultural competence and bridging the gaps require more than memorizing a list of facts about a specific country. It begins with developing an awareness of your own culture, values and biases. It means learning to expect differences and developing an appreciation for (or at least an acceptance of) them. And it means building deeper relationships across cultures that will withstand the challenges these differences bring.

These are a few of the teachings of Gunnila Masreliez-Steen, the president of Kontura Gruppen, a cross-cultural management firm based in Stockholm, Sweden. Here she shares some key differences between the cultures of the United States and her homeland.

Business environment.
Corporate Sweden flattened organizations 20 years ago, drastically collapsing the organizational hierarchy. Today Swedes are accustomed to working with a greater degree of autonomy than Americans. “‘Empowerment’ [in the States] means you’re talking about how to move power from the top to the bottom of an organization, in a hierarchical manner,” Masreliez-Steen explains. “In Sweden, you would find people are talking about cooperation and sharing responsibilities.”

This is consistent with Swedish collectivism. More than any other country in Europe, Sweden embraces the value of sharing responsibility for supporting all members of society. This value is apparent in the cooperative relationship between businesses and unions. “Swedes anchor every major idea or major decision both with the union and the personnel,” Masreliez-Steen says.

Sweden’s flattened corporate structure is successful due, in part, to a free flow of information between unions, employees and managers. Managers share their visions for the future and corporate goals on a regular basis.

Masreliez-Steen points to perhaps the most striking difference in the business environment: “You can’t fire people in this country. If you’ve employed them, you have to live with them.” The result is something that in the States would be considered insubordination: Employees who don’t agree with a manager may simply disobey him or her. This means that Swedish managers are more interested in consensus-building than their American counterparts. In order to pre-empt disagreements, establishing a rapport among team members is of great importance.

Communication style.
The Swedes practice this idea of consensus-building in politics, as well as business. The result? Sweden hasn’t been to war in 200 years. Masreliez-Steen says: “Our problem-solving model is very diplomatic and nonconfrontational.” She explains that Americans might view the Swedish people as “afraid of conflict,” but the Swedish perspective is that it’s better to find mutual ground on which to build solutions than to engage in conflicts.

This will be important to remember when you’re negotiating with your Swedish colleagues. The desire to avoid conflict and the importance of consensus-building among Swedish team members means that reaching a final agreement may be a little slower than if it were two American companies involved in the deal.

When it comes to casual conversation, Americans should restrain themselves from asking the usual series of personal questions: Where did you grow up? What school did you go to? What religion do you practice? Although Swedes may answer these questions, they won’t reciprocate with similar ones. An exchange of information like this doesn’t usually take place until Swedes know each other quite well.

One fact that should put both Americans and Swedes at ease is that most people of Sweden not only have strong English-speaking skills, but also really enjoy the opportunity to practice speaking the language. This applies to taxi drivers and sales clerks in addition to your business contacts.

Building relationships.
Building strong relationships with your contacts in other countries is like taking out an insurance policy against cross-cultural mishaps. Always take the time and invest the energy to do it the right way.

Fortunately, your colleagues in Sweden will make relationship-building easy. Many have at least a basic level of exposure to other cultures through language-training and travel during school. This means they’ll be more comfortable with cultural differences than those with no prior experience.

Swedes also are familiar with U.S. management styles, having studied from American training materials. Masreliez-Steen explains that when it comes to conducting business, managers from both countries will proceed similarly.

The basis for a sound working relationship is to get off on the right foot. Begin with a handshake and a “Hello.” Discuss nonpersonal current events or pastimes and then move into your business discussion. Be sure you’ve come well-prepared for the meeting.

One particularly Swedish trait that Americans should keep in mind is that at the final stages, if a Swede shakes hands on an agreement, he or she absolutely will stick to the bargain. “Honesty is one of the basic values in this country. If you’re dishonest, the punishment is enormous,” Masreliez-Steen explains.

Instead of reading these points as a laundry list of do’s and don’ts, take a broader perspective. These ideas should help you form the right questions to ask as you interact with people of any culture.

Global Workforce, October 1997, Vol. 2, No. 4, pp.19-20.

Peer behind the walls of today’s corporations and you’re likely to find executives analyzing and scrutinizing a constant stream of bits and bytes from their spreadsheets. As they sift through return on investment and net margins, long-term debt and capital expenditures, they struggle for ways to eke out ever-greater profitability and productivity. Managers know the value of their assets; they know the worth of their capital expenditures. They can print out simple arithmetic equations that show measurable results. They can produce clear statements about performance management objectives.

Yet, when the topic turns to international assignments, it’s as if someone has pulled the plug. There’s a disconnect. In an era in which everything needs to be value-proven and cost-justified, many corporations don’t even know the number of international assignees they have. Nor do their HR managers track the real costs. Equally important, these managers can’t tell you the value contributed by these international assignees.

So, who cares? Senior managers, that’s who. And they’re putting lots of pressure on HR. As greater sales are generated by companies’ global operations, and as the United States moves from an era during which international assignments were an anomaly to one in which they’re a daily business reality, senior managers will watch more carefully the revenue generated by these transferees.

It’s clear that international assignments account for an ever-growing portion of today’s corporate growth. The “1996 Global Relocation Trends Survey” by the National Foreign Trade Council and Windham International, both based in New York City, suggests that 43 percent of corporate revenue is generated outside of headquarters’ countries. But, it’s not enough to examine and cut expenditures, and it’s no longer adequate simply to guess that assignees are accomplishing the business task at hand. Today’s HR managers face a more complicated job: determining whether international assignments are yielding a positive return on investment (ROI).

The critical first step is to assess and assign value and expense. Next, HR must weigh the value against the cost. But caution. We’re heading into uncharted territory. The process is likely to require a paradigm shift supported by a combination of hard, quantifiable data, technology, and good, old-fashioned intuition and management experience.

Quantify the return.
Assigning a dollar amount to the value, or the return, from an international assignment is the greatest return-on-investment challenge facing global companies today. It’s such a tough proposition because companies and consultants are still struggling to create systems and standard processes to assist with calculating value.

“It’s difficult to measure value if you take an isolated view. You need to take a holistic viewpoint across your corporation,” says Andy Johns, head of expatriate employment policy and services at Shell International in The Hague, Netherlands. For one thing, departments that incur the costs don’t necessarily acquire the value. Costs are immediate, and value is derived over the long term. Furthermore, costs are visible; value is intangible. For example, to groom an individual as general manager of a large European operation, it’s common practice to develop that person first with an assignment in a smaller operating company. Most often, that employee is charged to the operating company for which he or she currently works, although that unit is only accruing part of the value. The value attained by other parts of the company needs to be accounted for as well.

Add to that the challenge of attributing value in such situations as when you send “Employee Jim” to establish the marketing of a new product in Poland. How do you quantify Jim’s marketing expertise, his flare or his management capabilities? How do you decide if you really need to have an expatriate in the location or if a business traveler or a long-distance “virtual expatriate” would be equally effective? You can collect data, you can use past experience, but at some point, you must rely on judgment and intuitive sensibility.

It all starts with setting clear objectives. “Measuring success depends on what you’re trying to achieve,” says Lauren Attinelly, consultant for Expatriate Policies and Practices for Shelton, Connecticut-based General Electric Co. “What are the objectives that one is trying to measure against? In some respects, they’re going to be in the eyes of the beholder. You’ve got success based on what the employee thinks, what the family thinks, and what the business and company goals and objectives are. I even wonder if there can statistically be a correlation between an individual’s performance and the company’s revenue.”

Calculating ROI for an international assignment in the typical sense is certainly difficult, as Attinelly points out, but not impossible. Johns suggests examining what he calls, the value drivers—the reasons for sending transferees. First is governance, or sending someone to translate corporate culture. Second is technology transfer, which involves teaching the local national staff how to use a new technology and then leaving it with them. Third is a skills shortage. There aren’t enough drilling engineers in a country, for example. And, finally staff development assignments focus on developing a future cadre of individuals capable of running a global business.

Employees sometimes fulfill more than one of the value drivers—other than governance, which typically would be restricted to senior levels. Once an employee has been with the firm for a while, he or she can transfer internationally to fill a skills gap. The employee can teach skills (accomplishing technology transfer), and, at the same time, he or she is also learning. If all three of these activities are occurring at the same time, you need to figure out how to put a price tag on each one.

Notice the different kinds of value offered by each of the four types of assignments and how each must be measured differently.

• Governance assignments communicate the corporate vision.
• Technology assignments bring technological know-how to new regions. This can be accomplished in different ways, rendering different types of value. The short-term choice might be to bring a local person to a technological center and transfer the technology to him or her. For example, you could bring a Malaysian to The Hague. Or you could send an expatriate to Malaysia who could transfer technology to three or four Malaysians.
• Skills shortage assignments bring needed skills to another region. The value of this type of assignment is easiest to quantify because it’s unambiguous. You can price the skill in the open market as if you were hiring an individual from a competitor. The questions then become: Is a competitor’s employee cheaper than an expatriate of yours? And will the company continue to need those skills after the international assignment is finished?
• Staff development assignments cultivate management skills for the future. In terms of measuring, the value here is a little less obvious. “You can look at the alternative cost this way: If I had to go out and buy that finished product [employee] on the open market, how much would it cost me?” says Johns. The cost might be in terms of executive search or the salary premium one would have to pay in comparison with a home grown employee.

So far, so good, but there’s more. “The clear-cut business decision becomes a little more difficult to make when you move away from the production arena and get into areas of marketing and similar types of activities,” says Johns. “For example, [let’s say your company’s] pricing structures across Europe and strategies for market penetration need to be integrated, so you begin to build a European cadre of marketing experts. But it’s not easy to prove why you should be putting that German in Paris or that French [person] in Madrid. It’s not a skills shortage. Instead, you’re saying, ‘I’m building an organization for the medium-term that’s able to change its game—getting out of a national game and into a European game and, if necessary, into a global game.’

“Establishing the hard-wired link between the value proposition and the cost is where it gets really tricky,” concludes Johns.

Use performance management systems to define value.
“When you think of companies looking at their return on investment, they usually have a dedicated group measuring it,” says Attinelly. “Have organizations really set up the infrastructure to be able to measure ROI [for international assignments]? Are companies really setting objectives when they send people overseas? Are they communicating what those objectives are? And, are they measuring against them? And, if that group of expats is helping the mission, [have the HR managers figured out how to] tie in those individuals to a percent of growth?” In most cases, the answer is, “No.”

“There’s a mismatch,” says Alan Chesters, consultant with London-based ECA International. “Typically, domestic HR operations expend tremendous effort measuring performance and do a superior job in developing performance objectives and appraisals. But HR doesn’t spend much time looking at the individual cost of an employee. In other words, you don’t take one secretary and compare that output at the end of the year with other secretaries. No one worries about the unit cost of an employee; HR looks at the collective cost of an activity.”

The opposite is true for international assignments: There’s less effective performance management and greater focus on cost. “We need to reconverge those two intentions,” Chesters says. “In international assignments, we must have more exacting performance reviews and then correlate them with cost and value.” For example, you may worry about the high cost of a geologist doing oil exploration as an expatriate in Vietnam, but if he or she discovers oil, the cost is infinitesimal compared with the return.

“[Senior] managers are putting pressure on the HR function about the costs of expatriates because that’s the only thing they can really get their hands around; whereas domestically, they have all the measures for working out whether they’re actually getting value from that cost,” Chesters explains.

Chesters enumerates four categories of data collection that HR needs to improve to provide a sensible analysis of the value of individual assignments. HR managers should ask themselves—before, during and after the assignment:

1. What are the expectations? HR should establish and record appropriate objectives before assignments begin.
2. What commercial benefit will the company achieve from the assignment?
3. What will the individual gain? Consider the value of the expat experience that wouldn’t have been available to the employee if there hadn’t been an international assignment. (This should be measured by the perceptions of the employee and the organization.)
4. How will the organization as a whole benefit? How is it going to use the expertise the employee has gained and added to the enterprise?

“If you can find ways of measuring these factors and demonstrate the growth commercially, organizationally and individually, then the difference [in cost] between $10,000 in tax and $20,000 in tax for an assignment is insignificant. That’s why identifying costs and placing value on the assignment is critical. The qualitative elements can be measured, and although I’m not as sure of the accuracy of [those] quantitative results [on a one-to-one basis], you can attribute them to the influence of expatriates as well as from others,” says Chesters.

It shouldn’t be a surprise to discover that efforts at performance measurements are meager. As a matter of fact, a survey by New York City-based William M. Mercer Inc. indicates that only 15 percent of 52 U.S. companies that responded to the survey have formal procedures for measuring success. Yet Mercer’s April 1997 survey, “The Management of Internationally Mobile Employees,” states that there’s an increasing recognition among participants (who represent Australia, Europe, the United Kingdom and the United States) that value is as important as cost.

Measure the investment.
If the first hurdle in the ROI process is to determine why you’re sending an assignee and to identify the value of the assignment, then the second one is to monitor the costs, or the investment. Unfortunately, most companies don’t keep detailed records of everything that’s spent on expatriates. They usually have a good handle on reportable information for tax returns or compliance, but that’s just a part of the equation.

“When companies look at their investment, they may run a cost projection to see the expense of having an expatriate, but they won’t include many items or associated manpower costs to keep that person there. They look at actual cash spent and paid directly to the expat or on behalf of that expat. But they don’t look at the staffing requirements in HR to keep track of all this: the payroll resources, the system resources,” says Carolyn Gould, partner-in-charge of expatriate compensation and administration services for the Morristown, New Jersey, office of Price Waterhouse LLP.

As surprising as that oversight may seem, it makes sense historically. It used to be that headquarters staff sent expats. It was easier to track costs because the company was dealing with one nationality coming from one place: the headquarters country. But as firms became multinational and sent individuals from different locations, what may have started as one national policy developed into several regional policies. For example, European transfers have one policy and Asian transfers have another. The policies were administered within local regions and may have been completely different. Consequently, headquarters staff wouldn’t even know who was moving around the region. Some companies are so decentralized they don’t even have a complete list of international assignees.

“Many times divisions resist centralizing these functions because they want to make their own decisions. But the purpose of centralizing the administrative function is strictly so that a single group is monitoring and implementing what the business unit wants,” says Gould. “It isn’t necessary to give up autonomy in order to gather data and control expenditures,” she explains. So the first step in finding the information for the cost half of the formula is to consider centralizing data.

Next, begin to identify costs, the obvious ones and the hidden ones. There are three different types according to Gould: 1) Administrative costs include the time costs of everyone who has some interaction with the expatriate and would have had this interaction whether the employee was international or domestic. An example is payroll. 2) Actual cash and allowances include what the company spends on the expats. 3) Lost work time includes the cost of administrative-system breakdowns that create questions and complaints. For example, if you look at the hourly rate for an expatriate with all the allowances, what’s the cost of each phone call regarding errors? Gould says she has one client that had more than 200 expats who logged 3,000 phone calls, e-mails and faxes between themselves and management. Almost 57 percent were related to payroll errors. “That’s a waste of time,” she says.

HR managers need to take the time to examine overall procedures and processes, making sure they’re tracking everything that’s important. According to Gould, timing is a critical factor, especially for residency. HR may miscalculate its tax costs, for example, if it doesn’t understand and track specific time sequences. For instance, in Japan, if an expat is in the country on the first day of the year, the individual will be taxed on the entire prior year; if the expatriate leaves prior to January 1, he or she doesn’t have the same tax liabilities. This example may seem simple, but only if you know who is where and when they arrived.

Measuring ROI for international assignments is indeed a tremendous endeavor that extends throughout the scope of the global organization. It begins with identifying the strategic aims that managers believe the transferee is supposed to accomplish. Next, HR needs to develop a system for measuring value, including instruments to monitor and measure performance. Finally, it necessitates developing systems to track expenses, both long- and short-term, obvious as well as hidden, to obtain a complete picture of the costs. The process is demanding and requires careful thinking and planning, along with all the aids available today: technology, current workable systems and good, solid judgment.

Staying organized at the office while you’re on the road …

1. Determine the key activities that will need to be accomplished in your absence. Delegate these and include a follow-up process. Have the person who’s responsible for the activity leave you a voicemail or e-mail to communicate outcomes.

2. Compare calendars with key people. Anticipate any decision-making needs that are likely to arise when you’re traveling and determine a plan of action.

3. Discuss with key staff how they’ll handle emergency decisions and key decisions if they can’t contact you. Figure out ways to keep projects moving forward in the event that you’re out of contact.

4. Be sure key members of the team always know how to contact you.

5. Don’t call the office just to check in. According to Larry Senechal of Seattle-based Priority Management Systems, this gives your staff the unspoken message that you expect they’ll have problems they won’t be able to solve without you.

6. Make it clear to key clients-internal and external-that you’re going to be away and may not be able to return calls as quickly as you normally do. Inform them before the trip so they won’t be surprised.

7. Change your voicemail greeting.

8. Senechal says, the biggest problem is that people carry too much information with them. Empty your briefcase and only carry what you’ll need on the road. If you need to send clients follow-up material, do it when you return or have someone in your office do it. “Travel is too exhausting to pack an extra desk with you,” he says. “Look at the appointments you’re going to have and [bring only] what you need for them.”

9. Establish a company policy, written or unwritten, stating that key appointments and meetings aren’t scheduled on the day of your return from an extended trip.

Workforce, May 1997, Vol. 76, No. 5, p. 70.

Everyone knows the U.S.A. We export our culture everywhere in the world. From blockbuster movies like “Forrest Gump” and “Terminator 2” to music legends like Madonna and Michael Jackson; from the O.J. Simpson trial to Seinfeld; we advertise our personalities—and culture—via satellite to anyone wishing access. The Big Mac (R), fries and Coca-Cola (R) are staples from Australia to Zaire, and Levi’s denim jeans are a virtual uniform across the globe.

So, people know the American culture. With this type of exposure, the United States should be easy to adapt to when coming here on an international assignment. Right? Wrong.

People come to the United States with visions that are partially correct and partially incorrect. Fears, apprehensions and half-truths accompany their impressions that we’re outgoing, friendly, strong, beautiful and happy. Besides that, Americans are familiar with the idea of diversity and have a long history of integrating immigrants. It often makes us all believe that “foreigners”—no matter where they come from and no matter why they’re staying in the United States—will adjust easily.

The reality is, the United States is as foreign and strange to international assignees as other countries are to Americans. Sound simple? Sure, but we forget it all the time. Although the United States may be an easier destination to integrate into than some other countries because of its notoriety, HR professionals are well-advised to remember that assignees feel like travelers to another world. “We, as a country, need to be more outward-looking than we are,” says Jill Terry, principal human resources representative from Solar Turbines Inc., who manages a range of people—Germans, Chinese, Indonesians, French. Thinking about our country as a “foreign business destination,” however, is a fairly new role for us and requires a new mindset. Unlike the situation when we welcome immigrants and expect them to assimilate, being a host to foreign nationals requires we do just that—be hosts. Doing so means dealing with many of the same issues we must handle for our own expats. The most important issues are preparing the incoming workers for the differences in the cultural and business climate and providing them the support they need to be comfortable enough in our “home” so that they can perform the jobs they were brought here to do.

Global managers play a central role in helping to demystify the experience. Managing expectations and paying attention to timing in key areas such as immigration and education help expatriates adjust. They depend on HR to help them with an array of new experiences: language acquisition, cultural orientation, securing credit and bank accounts, gaining insurance and access to medical services, and understanding how the medical system works in the United States. Incoming expats must learn about transportation—whether they’ll be driving or using public modes of getting around. They need help anticipating what they’ll find in accommodations; parents require assistance with schooling and day care for their children. Spouses and accompanying partners need special attention, too.

The huge influx requires a new way of thinking.
Nearly 90,000 foreign nationals annually are brought to the United States by their American employers, according to the U.S. Immigration and Naturalization Service. American companies are acquiring international businesses or going into joint ventures, making it imperative to bring key individuals to the United States to help transfer corporate cultures. In addition, many U.S. firms, such as those in the high-tech fields, have an insatiable hunger for individuals who possess skills not readily available in the United States.

“We’re definitely experiencing a big change in the volume of people coming to the United States,” says Sharon Richards, of the Business Practices Network at Santa Clara, California-based Intel Corp. “We’re not only bringing more people to the United States, but we’re seeing that the people who are coming have a wider variety of backgrounds. For example, we’re seeing people who come for a particular training assignment as well as those who fill the usual high-level, global-manager positions.”

American firms aren’t the only ones bringing foreign nationals to the United States to work. The Christian Science Monitor estimates that approximately five million workers in the United States are employed by foreign-owned firms. And these companies have $60 billion in direct investment in the United States, says the United Nations Conference on Trade and Development. With this type of foreign investment in the United States, it represents an enormous market for foreign companies to both produce and market products, thus creating a need to send their expatriates.

Fortunately for these incoming expats, the United States is possibly one of the best places for an international assignment. It has one of the highest standards of living in the world and a lifestyle that’s considered unequaled. Yet, the cost of living is affordable by many nations’ standards, making the United States an attractive and cost-effective place to bring—or send—expatriates. Still, that doesn’t mean it’s simple for foreign nationals to come to the United States and integrate into its workplaces. Like our expats going abroad, incoming expats must first weather culture shock.

Prepare for culture shock—U.S. style.
The fact that foreign nationals come with expectations of American culture actually can make their assignments harder, not easier. “The United States is so well-known around the world via movies and television that people tend to have a lot of assumptions,” says Richards. “They assume they know us. Some of the information they bring is accurate, but some is inaccurate.”

Therefore, setting realistic expectations is one of the most important aspects of preparing an incoming assignee. One of the most difficult adjustments for non-Americans has to do with socializing and community. “Americans appear extremely friendly on the surface,” says Terry. “We talk about getting together for lunch or for dinner, yet we don’t follow through. People in other countries frequently form friendships in the workplace that transcend work and cross into other parts of their lives. When [personal bonding] doesn’t happen in the United States, this may shock them and can create hurt feelings.”

But, more problematic than simply hurt feelings, this could lead to a sense of isolation which may cause withdrawal and depression. This can have serious implications for business. “Initially they may go to the workplace and believe that they will have real relationships and friendships with Americans,” says Sondra Thiederman, president of San Diego-based Cross-Cultural Communications. “When that doesn’t occur, they may begin to cluster: They form groups among themselves and are reluctant to socialize with native-born Americans because they don’t understand them.”

Another false expectation incoming workers may have is the concept of a “typical American,” being someone like John Wayne. You can imagine the shock when the reality hits. Not only is John Wayne a dated icon that sets ups incorrect expectations, but he certainly doesn’t illustrate the variety and diversity of the general population. Greater mysteries yet: Americans don’t even speak the same dialect, and sometimes not even the same language. “[Assignees] may have learned English in their home country, but if they’re put in a living environment in which they listen to Asian or Southern accents, it complicates the process further,” says Intel’s Richards. The incoming expats need to be prepared for the demographics of the location in the United States they’re going to live in as well. Albuquerque is not Seattle and is different again from New York City.

At Intel, all incoming expats receive pre-departure training in their home country to address these types of issues. Typically those that surface have to do with safety—Is it safe to walk on the streets; where can children play? Oftentimes Intel moves large groups of employees from one country to another. In these instances, Richards and a staff of experts present a “Road Show.” They gather the group and talk about all the relocation issues at one time—covering taxes, policy issues, housing, education and all of the relocation questions the expats will be facing.

Country-specific cultural values comprise one large component of the training during which Intel includes the expats’ partners and older children. Richards says: “We’ll ask them, ‘What are the Irish cultural values; what are the Malaysian cultural values?’ And then we’ll compare the similarities and differences with the American cultural values.” As Richards points out, it’s important to know both the written rules and the unwritten cultural ones. For example, when interacting with a police officer, it’s critical to know the proper way to conduct oneself. If assignees naively start to get out of the car or reach for something, they could find themselves in a dangerous situation.

Another part of Intel’s training focuses on expected workplace behaviors—behaviors dictated both by culture and by law. People unaware of our laws and expectations surrounding sexual harassment, for example, may find themselves in trouble simply by doing what is culturally correct in their own countries.

Intel addresses these issues head-on in several ways: education, mentoring and training. Richards has created a booklet called, “Things You Need to Know About Working in the U.S.A.” that talks about sexual harassment, recognition of gay and lesbian rights, and Intel’s expectations about behavior. All incoming expatriates receive a copy.

In addition to this type of preparation given to the assignees, Intel trains receiving managers to work with groups of people who are coming in from other cultures. The managers learn how to integrate new team members from a work perspective. As one example, the managers may design a buddy system so incoming foreign nationals have partners from whom they can learn the ropes.

“The rewarding thing at Intel,” says Richards “is that managers now are requesting cultural training. They know it’s important because people have different communication styles, different values, different behaviors. The question is how we can understand and work with them effectively. It’s learning both ways, what I call closed-loop training.”

Support incoming expats.
Recognizing—and more importantly, addressing—cultural differences the way Intel does, is crucial. Successful assignments require careful planning—from the selection process through support systems.

Los Angeles-based California Commerce Bank and parent company, Banamex USA Bancorp, epitomize the way in which U.S. global managers can think creatively to help people succeed in the United States—and be cost effective at the same time.

“We strive for excellence in our expatriate assignments (both incoming and outgoing)—by employing people who will deliver almost from Day One,” says Dennis Campos, senior vice president of human resources for California Commerce Bank and instructor for the University of California at Los Angeles Extension Program. The array of incoming expats—corporate bankers, marketing officers, foreign exchange traders—mostly from Mexico, come to the United States because many of the bank’s employees must be bicultural. Customers of the bank are both U.S. corporations and multinationals that have a business relationship with the parent bank, Banamex USA Bancorp, in Mexico City.

The thoughtful nature of the assignment process is apparent from the beginning of selection all the way through the support of expatriates during their stay in the United States. Selection starts with the nomination of a candidate from the parent firm based on the person’s technical quality. It continues with cultural and personal assessments, interviews (with the family as well) and several visits to the United States, during which time Campos and his staff hold a series of meetings with the candidate to decide whether or not he or she will do well in the U.S. company’s corporate culture. One of the major concerns is the ability to thrive in the multicultural environment of the California bank.

Once both sides decide the assignment is a good match, the expatriate makes another visit. Home finding and orientation with the U.S. staff come next. Expats meet with HR, their soon-to-be supervisors, relocation experts and tax consultants. The bank doesn’t follow the pack in many of its approaches and is quite progressive. Compensation is designed so expatriates can live at least the type of lifestyle they did when they were in their home country. The bank recently redesigned the compensation package so that expatriates are treated like U.S. locals. They get a salary that incorporates their special needs as expats, but they pay their own U.S. taxes. For example, although private schooling isn’t usually included in the package, exceptions to this rule are given as part of the salary, not as an education allowance.

“This is very different from what most people are doing,” says Campos. “We take advantage of the U.S. tax laws. A few years ago we followed the expatriate standard package of the parent corporation. It didn’t take anyone much time to figure out that we were simply paying a lot of taxes to the U.S. government needlessly because we were paying expats on a net basis and grossing the salaries up, indemnifying the expats for retirement in Mexico and also indemnifying them for fluctuations in currency.

“We redesigned our plans. Now because we treat them as locals, if they’ve had one year of service, they can participate in our retirement plan,” says Campos. “When they hit the States, they’re in the 401(k) plan and our pension plan. We’ve found it to be much cheaper than indemnifying them on any lost retirement they would’ve had if they’d remained in Mexico.” They return to Mexico with two qualified retirement plans that continue to grow, tax-free, until retirement.

This international approach to compensation, retirement benefits and medical coverage requires planning and coordination with the non-U.S. division or affiliate. It also requires sensitivity to the assignee’s individual needs. For example, when there’s a working spouse, that’s factored into the package so the family doesn’t suffer a decrease in lifestyle because of the lost income. Home travel is frequent when there’s an extensive nuclear family because of the importance of those relationships.

With the great influx of expatriates to the United States, it’s critical to lessen the mystery. We may be a foreign destination, but we don’t have to be as mysterious as the moon. With the right processes in place, adequate planning and time, expats won’t feel like they’re stranded on a strange, foreboding planet.

It’s November 1992, the hottest, most humid time of the year in Bali, Indonesia. And the Four Seasons Resort Bali is about to open for business. The incomparable island beauty serves as stark contrast to the hotel’s makeshift training center—an old, dreary elementary school building with bare, low-wattage light bulbs hanging from the ceiling. Mediocre ventilation has made the room hot and still. The Peace Corps-like setting seems a world away from what will soon be one of the globe’s top-rated resorts.

When Michael Burchett, general manager for the hotel’s opening, and the other Four Seasons hotel managers embarked on creating this first-class resort at Jambaran Bay, Bali, they hardly suspected what awaited them. The area’s luxurious white-sand beaches and lush tropical rain forests couldn’t hide the challenges they’d soon encounter. They knew that creating paradise wouldn’t be easy, but they didn’t know just how daunting it would be. It took all of their HR know-how, cultural skill and interpersonal sensitivity to make it work—first at the Bali Resort, then a few years later at The Regent Jakarta hotel on the island of Java. Indeed, they did make it work—and on a world-class level.

Meeting high service expectations. When opening a hotel that’s known worldwide for having the highest quality of customer service, there’s no room for error. Hotel staff must be outstanding and respond correctly every time. Clerks at the front desk must coordinate rooms to exact customer specifications; staff who deliver room service must not only cook excellent food to order, but also must deliver it quickly and present it superbly; concierge, bell-station attendants, waiters, fitness center and pool attendants must respond to a wide range of customer requests—and everyone must be friendly and engaging. And to top it off, they must achieve these standards in an environment that may be as strange to the employees as a Jakartan pushcart is to a traveling American.

The HR issues encountered in creating this atmosphere were numerous. To begin with, the hotel (both then and now) has two types of staff—expatriates and local hires. That in itself created its own obstacles. In addition, there were myriad challenges of bringing local hires’ skills up to world-class level. From recruiting to training, from recognition to performance appraisals, Burchett and his HR staff had to operate in a workplace in which the view of the situation was often as obstructed as the view of the ocean through giant vines and elephant-ear plants. They couldn’t take for granted that what had worked in Chicago or Sydney would work in Indonesia; they had to discern the distinctness in this environment—the individual and cultural issues—to determine how they’d construct and implement HR policies and how they’d treat people so they’d feel motivated and feel like they were dealt with fairly.

Four Seasons Resort Bali: Transforming a remote island village into a Garden of Eden. The Four Seasons’ staff hadn’t expected to start from scratch. They anticipated being able to import standard HR training procedures-practices that had always worked so well elsewhere. Not so, here. “Training here was different from anywhere else,” says Royal L. Rowe, executive assistant manager. “It was fraught with opportunities to excel.”

Although there were more than 10,000 applicants eager to fill the 580 jobs, virtually none were able to speak English, and many didn’t have any concept about world cuisine and western customs. In fact, many of the Balinese applicants had never even left their island, meaning training had to begin at a more basic level than usual.

Traditional corporate training methods were fairly useless in educating the indigenous population to Four Seasons’ standards, says Rowe, because most of the training was geared to young Americans with some college education. More than their education, eager, young Americans also have an idea about the Four Seasons’ corporate philosophy. In fact, the only thing the Four Seasons training staff could count on from the beginning with the Indonesian employees, and the Balinesian people especially, was their cultural predisposition to be gracious and hospitable. In other words, the concept of service didn’t have to be taught —just refined.

It was the specifics of western culture, however, that the native workers needed to learn: cereal is a breakfast food, hamburgers are what guests eat for lunch; milk goes with cereal, butter goes on toast, ketchup goes with fries. Then, there are the finer points of serving Westerners: the fork goes on the left, never reach across one person to serve another. In fact, Rowe recalls one trainee who had never seen a hamburger or fries before. That was January of 1993.

From book learning to communication. As problematic as cultural-based differences might have seemed, fully 90 percent of the HR staff’s training difficulties revolved around communication. Because the official language of the hotel chain is English, there’s an English-speaking policy-all employees must demonstrate a minimum level of proficiency. “It didn’t take us long to figure out that language was going to be the real problem here,” says Rowe. “It was the key to success, because if you couldn’t communicate, you could drill people all day long that hamburgers get ketchup, but if they couldn’t understand that the guests were saying, ‘Ketchup, please,’ you just couldn’t make it.”

So, developing communication skills began at the hiring phase. All 10,000 applicants were given a simple English test with 10 questions-true and false. (One question, for example was ‘I am a fire truck. True or false.’) Says Rowe, “We had all these great ideas. We were going to have minimum standards for speaking English. But that got pitched five days into the mass hiring because we wouldn’t have had any employees.”

Instead of trying to hire local people with English skills and knowledge of western idioms, the HR staff had to go a different route with heavy, intensive English training from the beginning. That’s when Burchett, Rowe, and the rest of the personnel staff started the Self Access Learning Centres. The idea was to create a learning center that would allow the employees to teach themselves an unfamiliar language.

At the outset, everyone reported for training on November 8, 1992, to learn enough English so they could staff for the hotel’s opening on December 12. Training took nine hours a day, including classroom and practical training time. The company hired a training firm specializing in the hospitality industry that did intensive work in teaching restaurant- and hotel-related words, such as salt and pepper, and bath towels.

“We knew we were setting a whole new standard,” says Rowe. “But we didn’t know how difficult it was going to be.” Although the training center started out as crude and makeshift, it has now developed into a library-like study center, located adjacent to the HR offices, that features computers, tapes, VCRs, training modules, books and magazines. Today, potential employees are given a test prior to hiring to gauge their English skill level. Once hired and trained, they begin the course, which takes them from the first to the fifth level. When employees move to each new level, they receive a certificate and monetary incentive.

The Self Access Learning Centre has grown considerably. Now, along with English for the Balinesians, foreign managers at the resort develop their Bahasa Indonesia (the native language of Indonesia) skills. And, Japanese language classes are also taught because Japanese visitors comprise approximately 20 percent of the hotel’s visitors.

Three years later, the Balinesian staff is dedicated not only to serving its patrons, but also to being capable of speaking and communicating to meet just about any traveler’s needs. Moreover, as the hotel industry in Asia continues to expand, these trained and talented individuals have skills that are needed throughout the region. Although this concept may not seem surprising to many global HR professionals, the idea of moving to Jakarta or to Singapore or to the United States and working there is an almost unbelievable concept to some of the Balinese who’ve never flown or even traveled around their own country.

While Rowe didn’t know how difficult it would be to get the staff trained and operating at top efficiency, he says he also didn’t know how successful the hotel’s opening would turn out. To illustrate its success, Condé Nast Traveler magazine’s annual Readers’ Choice Gold List poll (January 1996 and 1997) scored the Four Seasons Resort Bali as one of the highest-rated hotels in the world. Clearly, by even the most objective standards, the hotel management has achieved its objectives—and more. Business to the hotel has increased steadily since the hotel opened. Guests from all over the world are taking advantage of the manmade paradise, particularly visitors from North America, Europe, Asia, Australia and South America. Other Polynesians even are feasting on the hotel’s opulent surroundings and service.

HR moves on to Jakarta to open another hotel. Burchett traveled to The Regent Jakarta hotel in early 1995. Having had such success in Bali, he brought along the idea of the Self Access Learning Centre. Successful as that aspect of training was, Jakarta, which is on the island of Java in Indonesia, challenged Burchett and his HR staff with different problems. “I’ve opened four hotels,” says Burchett (who is Australian), “and they don’t get any more challenging than this.”

Just like in Bali, thousands of applicants lined up for jobs at The Regent Jakarta—22,000 for 650 positions. Jakarta is a city of 10 million, with access to McDonald’s burgers and Citibank ATMs. Many citizens know English and have traveled extensively. However, the most critical issues impacting the hotel’s success in this location have been vast cultural differences revolving around the expatriate and the Indonesian staff. As of mid-1996, there was a staff of 809 which included 57 managers and 18 expatriates—making up 48 percent of the total payroll.

More than dollars, though, there have been misunderstandings between middle management and expatriate staff about compensation and allowances packages, and generally how employees perceive the organization’s treatment of them overall. Jealousy has been a frequent byproduct. Reny Ratman, director of HR who’s Indonesian but comes from a diplomatic family, is highly regarded because of her ability to span both cultures. Ratman and her eight-person HR staff have had to call upon their diplomatic skills often. They’re responsible for resolving many of the misunderstandings around quality issues and have had to help ease the pressure the senior staff exerted on the local national staff.

Says Burchett, who’s now the general manager of The Regent Jakarta: “Our standards are so high, it puts a lot of pressure on people.” For example, if a chair isn’t straight or there’s a smudge on something, the managers will point that out. Indonesians read that as criticism. Not that it’s meant to be negative, but Indonesian culture tends to avoid criticism and conflict. Direct—even blunt—Australians (or Americans, Swiss or whoever) trying to manage and empower indirect, subtle, exceptionally polite Indonesians, has created obvious challenges from the beginning. The middle management staff has been the area in which most misunderstandings started. For instance, the expatriate managers said they were frustrated because they didn’t feel the managers were managing. At the same time, the managers were frustrated with senior management because they said they wouldn’t let them manage. In turn, the expatriates said that to help the managers manage, they believed they’d have to instruct them in detail. On the other hand, the managers believed they were being coddled—talked down to.

“So, in trying to knock down barriers (by explaining thoroughly), we were actually building barriers,” he says. Frustrations continued to build because Indonesians avoided conflict. Burchett believes that he, and a few other senior managers, are still having to change their focus and proceed slowly so there’s time to learn and to overcome differences.

Yet, Javan attention to detail and affinity for service has made the hotel a traveler’s nirvana. For example, April Kayadu who works in the hotel’s concierge department was praised for one particular act of “going beyond the call of duty” service. She went out of her way (while off duty) to help a guest resolve an airline ticket problem. Lesson for the hotel management: World-class service can come from anywhere. Just like the hotel’s landscaping (for which the hotel received top honors by the Jakartan government), quality service must be cultivated and nurtured.

Lessons learned. If he had it to do over again, Burchett would do some things differently. “I’d educate all of our expatriates before they arrived and ensure that all of them speak the language fluently. Speaking the language not only assists you with communications, but it also gains you a certain respect and understanding from the staff, and people in general.”

He remembers when the Regent opened in Sydney in 1982, the general manager created Australian cultural classes so that the Swiss, French and German staff knew how to deal with Australians. “Here the cultural issues are different, but we should have done the same thing. We’re not producing a product. It’s all interaction,” Burchett says.

However, he believes that having the language center is a big advantage, and would do that the same. The $120,000 (U.S. dollars) center emphasizes communication, not simply learning to speak English. Its purpose is to improve confidence and create an atmosphere in which employees develop and can move throughout the region and globe from one Four Seasons hotel to another.

Whether it’s culture or language, training is critical across cultures. The tropical lure of Bali, the exotic enticement of Jakarta are but portions of the experience. In any business, it’s the people who propel it; in the hospitality industry, it’s people who are key. Cultural and language issues can separate or unify people, but they’re as much a part of global business as compensation and benefits. Beyond the obvious differences in culture, it’s HR’s job to resist the temptation to model training based on past experience. Instead, HR must learn to combine the training needs of the local culture with the high standards of the company’s corporate culture—and do that in the best way for the employees. The result can be exactly what these two hotels have achieved: a paradise for world travelers and a case study in global staffing and training.

Richard L. Kellogg, vice president of employee relations at Coors Brewing in Golden, Colorado, says:
“If I were to choose items to put in a time capsule, I would select several things that would describe the current penchant corporations have for downsizing and the huge bonuses CEOs are receiving for the amount of carnage they’re able to create. Imight include newspaper clippings or magazines that would illustrate this.

“I don’t think these kinds of layoffs can last—layoffs in the tens of thousands—and I think in the long term we’re going to look back and see, not only did we increase shareholders’ values, but we also lost the loyalty of employees. We’re already seeing a backlash, and I think someday it will be interesting to look back and see what happened to those companies that tried to cost-cut their way to prosperity. I really don’t think it will work. I think we’re going to look back and ask, ‘What was wrong with us?’”

Charles Larocque, director of human resources at Bell Helicopter Textron in Mirabel, Quebec, says:
“The three things I would put in a time capsule are linked together. They’re not necessarily for only human resources professionals, but they celebrate the anniversary of Workforce (formerly Personnel Journal). The first would be a group picture of all the present contributors to Workforce—with their wishes for the future HR people of the country.

“I would use a card instead of a video or a CD-ROM because Workforce is a print medium.

“In order to make the link with the past, because this will be opened in 2072, I would also put in a bottle of California wine because they say that wine gets better with time. While people read the wishes, they all could have a glass of a 75-year-old wine. The link to the future would be to put the seeds of a tree that will be planted in the year 2072 for future generations.

“So the bottle of wine makes a link with the past, and the seeds of the tree make the link with the future. The card with the picture represents the present, and the wishes represent the future of human resources. Today, there’s a lot of uncertainty about the future, and we all hope that everything’s going to be fine for our children and our grandchildren.”

Terri Wolfe, director of human resources at Patagonia Inc. in Ventura, California, says:
“If people were to open [my] capsule, they might say, ‘Oh, do you believe that these were issues 75 years ago?’

“The most important item would be an employee handbook that has at-will statements throughout. This is because it would show the value of developing quality relationships—with employees, customers, suppliers and anyone else in our sphere of relationships. It’s an important HR concern because the relationships between employees and employers over the last 20 years have really become degraded. In fact, the idea of what people can do together to make the company successful on a long-term basis is no longer a phrase that employers are even willing to verbalize because they’re so worried about [creating an] implied contract.

“Then, I’d put in a copy of Working Mother magazine’s Top 100 companies. This would show something about companies that are really addressing the issues of helping employees balance their personal and professional lives with family-friendly programs. It would be interesting because this issue is currently leading edge, and in 75 years, people could see that some companies always have addressed these things.

“Finally, I would include a huge package that gathers all the legislation, testimony and arguments for and against legal immigration. From an employment standpoint, the government’s reaction to illegal immigration is to make legal immigration much more difficult. As a result, organizations are having a difficult time finding, recruiting and hiring the best people for the job because of the increased regulation. If it gets much more restrictive, you’re not going to have legal immigration that’s job-related. It will be interesting to see in 75 years.”

Nancy Breuer, principal, Breuer Consulting in Los Angeles, says:
“My items all relate to employees facing life-threatening illnesses and the response of human resources.

“My first item would be a padlock to serve as a reminder of how strict confidentiality laws are. Once you receive information about a person’s medical condition, you have to lock it up in your desk and in your head. “My next item would be a stopwatch next to an hour glass. One shows time tearing along, and the other shows time moving so slowly. The key is that HR managers understand the differences in perception of time and that an employee facing a life-threatening ilness is facing a new sense of time and has no patience with the normal bureaucratic pace. The HR person’s behavior has a big impact on how the individual feels about the company—whether whether he or she leaves feeling bitter or not.

“I would also include a photograph of twp people from behind, arms around each other, walking away into unkown territory. THis would exemplify that people can’t go through these experiences alone. They need support from co-workers and others around them. Also, everyone must remember to continue to treat a terminally ill individual as a whole person and not as a walking diagnosis.”

Workforce, January 1997, Vol. 76, No. 1, pp. 172-173.

Wednesday, 8 a.m: The crisis team is in a sweat. Maps, loose documents, marking pens, scrawled notes litter the large oak tabletop in the boardroom. Talking to the group is the head of security. Around the table sit the CEO, the general counsel, the director of public affairs, the CFO and the director of HR.

“Yes, it’s true,” says the security chief. “As you know, Murphy — who’s head of production and quality control for our Latin American operations — was meeting with local managers for our assembly plant in La Republica. He has been reported missing. Yesterday, after he failed to arrive at his meeting, our local manager, Mr. Jimenez, called his hotel. Murphy wasn’t there. Neither was his rental car. Jimenez checked again this morning. His luggage is in the room and he hasn’t slept in his bed. He has been missing for 24 hours.”

Questions around the table: Do we have a crisis yet? Are we going to call his wife to see if he called her? If she hasn’t heard from him, how are we going to handle that?

The phone rings. It’s Murphy’s secretary. His wife called because he hadn’t called home the night before. She’s worried. More questions: What should the secretary tell the wife? Do we want to call the local police? Do we know if the police in La Republica are corrupt? Incompetent? Do we want to enlist their help to see if he’s in a hospital? Have we made any friends in the government? Maybe the U.S. Embassy would be the better place to start. What if it’s a kidnapping? What is our policy on paying ransoms? Is this a country where payment is illegal?

Four hours later. The group is sure it’s a kidnapping. A man with a tough-sounding voice gave Jimenez directions to where he would find ransom instructions. There’s a handwritten note from Murphy to his wife and a neatly typed one demanding $3 million.

The tension is palpable. How shall we deal with the authorities? The HR director is concerned about employee morale. Four other expatriates live in the area. What about Murphy’s family? Should we give his wife the handwritten note? Who will make an emotional assessment of her? Will she be able to withstand this pressure, or might she become so stressed that she’ll create new difficulties for the company? Is the family in danger? Should we send someone to the country to assist?

Another phone call. A writer from The Wall Street Journal has heard that an executive has been kidnapped and is calling for a quote. How will we handle the media? Do we know a journalist at this or another publication who will work with us?

A note is passed to the security chief. Another executive — an expatriate from another company — also is missing. And there’s whispering that during the recent labor strikes, threats were made against company personnel. How do these events affect our hostage? What do we do?

It could happen to you.Although this story of terrorism is fictitious, it’s played out in real life again and again in varying scenarios with varying degrees of success. It’s performed equally often in simulations by crisis management teams at companies with managers who realize they need to prepare — and practice — if they’re going to do business in a dangerous world.It’s not just the fiery jetliner terrorist attacks we hear about in the media. In fact, these are quite rare — although public reaction to them is strong because the acts randomly target a broad audience, creating a sense of general alarm. It’s also the estimated 10,000 to 15,000 kidnappings each year, threats against products and death threats to corporate executives.By the definition in Webster’s New World Dictionary, terrorism is the “use of force or threats to demoralize, intimidate and subjugate” individuals. Terrorism most often is used to describe acts of violence that are politically motivated. Similar acts of violence are economically charged. In some countries, the degree of civil unrest and the level of serious crime are as virulent as terrorism. Extortion, shipment hijackings and the increasing episodes of violent street crime are examples of this. Global HR managers must be competent to address all threats to overseas personnel and resources, regardless of the motivation.“It’s not a peaceful world,” says Brian M. Jenkins, deputy chairman in the Los Angeles office of Kroll Associates, an investigative and security firm. “Depending on how you count them, there are several dozen wars, armed conflicts, [areas of] guerrilla activity and major terrorist campaigns taking place around the world. And better than 60 percent of all international terrorist attacks are directed against the private sector.“In addition to armed conflicts and politically motivated conflicts, there’s growing organized crime that’s a reflection of the end of the Cold War in the former Soviet Union and Eastern Europe, and the economic liberalization of China.” In fact, asserts Jenkins, “When it comes to these economically motivated activities again, clearly the corporations are the No. 1 targets because they’ve got the deep pockets. This is strictly business. These are new dangers that companies aren’t used to.”
And there are a lot of businesses venturing out into the global marketplace. While it used to be only a small number of firms — the oil companies and the construction firms (and their tight, protected communities of expats) — with global operations, today relatively modest companies are beginning to operate internationally. To illustrate the point, a 1996 United Nations report indicates multinational companies almost doubled international investment in 1995 to $315 billion (U.S. companies alone doubled their 1994 figures to $96 billion).The effect of terrorism and crime on these companies is astounding. Although dollar amounts are hard to come by, an estimate by the U.S. Office of Counter Terrorism put the cost of one London bombing by the IRA (Irish Republican Army) at $1.5 billion; the cost of a kidnapping may run $2 to $3 million.But, it’s not just about money. These threatening environments have a significant impact on people — as companies try to recruit people to these locations, coax them to stay on the assignment and ask them to abide by the security measures. It’s about the morale of the people who are there, and if a major event occurs, the morale of employees corporatewide. What is the impact on families? How will the environment affect lifestyle and freedom of movement? Will expats have to live like fugitives? Thus, HR is integral to front-line defense, and there’s much HR can do because security is really a people issue. It involves assessing the risk, designing and living with security and responding to any crisis.

Global risk assessment is a logical first step.Companies such as Kroll Associates, Control Risks Group and International SOS Assistance Inc. are in the business of understanding risk and helping prevent and prepare for it. “Businesses are obliged to do very sophisticated global risk analysis,” says Jenkins. “Firms must look at a wide spectrum of dangers.”
From national disasters to man-made terrorist attacks, the key question is this: If this plant shuts down, what’s the impact on the rest of our company? If the plant is the only maker of a component part required by other divisions of the company, what will happen if the part is unavailable for a week? You see this division of labor particularly in high-tech industries in which chips and other components of computer systems are manufactured all over the globe.
“Short period shutdowns can have cascading effects on the business,” says Jenkins. And plant shutdowns mean loss of work for employees. The biggest area of vulnerability is always the effect of an attack on people. So, the real issue is protecting people, including those who operate the plant.How would you go about your first venture out? A wise move is to consider consulting with a firm that specializes in global security. Obviously, each company has its own specific needs with its own specific culture that will help formulate its security measures. But every company interested in protecting itself and its people should begin with a thorough evaluation.
That means asking such questions as what are the political situation and the economic situation in the countries you’re moving into? What are the local security risks? What is the business environment? Is there a lot of corruption? Will the bidding process be fair? What about the security of information? In many parts of the world there’s aggressive industrial espionage, particularly in highly competitive environments and developing nations.

Choose a security system that fits your environment.Once the initial assessment has been made, the next step is to answer some questions about security. Evaluate questions such as what kind of security program do you need, and what are the likely costs? This is the point at which to develop an overall strategy. What kind of security system for the facility is necessary? Will the company need guards, alarms or a fence around the perimeter? Will it be best located in a high-rise with tight security?The assessment should extend beyond the confines of the corporation. A look at local conditions should help in determining where employees should live. Do they need to live in compounds, or will they be safe in regular housing? Do they require drivers or other forms of guards? Are there ways to alleviate the stress of tight security measures?
“While the details vary from company to company and country to country, your goal is not to present a soft target. You’ve got [to make your company and employees] as hard a target as possible so [terrorists and criminals will] go elsewhere to find a victim,” says Frank Waldburger, director of Security Services for Philadelphia-based International SOS Assistance Inc.Products need to be protected, too. One of the major problems in the world right now is the theft of computer chips, easier to transport than gold. A truck carrying this high-stakes cargo to market is worth millions of dollars. A company needs to assess how to protect itself against hijackings, thefts and armed robberies outside of the facilities.

Be prepared for surprises.Finally, despite all the security efforts, events will occur. It may be a threat against a product, a bomb scare or a catastrophe that shuts down operations. Any of these could create a major crisis. Therefore, a key ingredient to the success of any crisis management is to identify the key people who would make decisions, create a crisis management team and define what its members will do. Identifying individuals and creating a crisis management structure consistent with the corporate structure (will it be centralized or regionalized, for example) is a crucial step. Then, the team should train and practice. And the company needs to determine at what point to call in security consultants.Most security firms can help develop procedures and manuals. They’ll aid in creating evaluation plans. But it’s important for individuals on the crisis management team to know these procedures before they need them — and to practice implementing them.One crisis team simulation by Kroll Associates proves the point. The crisis management team of a food manufacturer had undergone a simulation three months before an actual product tampering. When the real problem occurred, it took 48 hours to identify the situation, alert the individuals who could remedy it, remove the product from the shelves, conduct the necessary laboratory tests and reinstall the safe product. The crisis was averted. According to the company, without the practice, it would have taken much longer to respond and the company even might have lost market share.

HR can help expatriates and traveling executives by keeping them informed.HR plays a vital role in every stage, from the preparation through the crisis response. One of its most vital roles, however, is keeping employees safe by guiding travelers toward the tremendous array of information services and daily bulletins available through specialized services online or via the telephone. These services provide travel advisories and give detailed descriptions about recent happenings relating to security and politics.One fairly comprehensive source of information about terrorist activities you should be aware of is the U.S. Department of State’s “Patterns of Global Terrorism” Web site (http://www.hri.org/docs/USSD- Terror/93/append.html). Here you can find a chronology of significant incidents and background information about terrorist organizations.“HR should give employees and their families as much information as possible about the destination. They should be as straightforward as possible about the dangers and what the cultural issues might be,” says Shirley Gaufin, currently vice president of human resources at Pasadena, California-based Parsons Corp. and formerly vice president of HR for San Francisco-based Bechtel Group Inc. Gaufin was employed by Bechtel when it relocated 16,000 people during the height of the Gulf War to the Persian Gulf. Moreover, she says, “Put them in touch with others who already are at the job site, provide adequate R&R or home-leave, be sure there’s adequate medical care and evacuation services, if necessary.”These are efforts the Church of Jesus Christ of Latter-day Saints also advocates. Currently the church has 50,000 volunteers around the world. These individuals are missionaries and support staff and their families. Because of the nature of their work, they always live among the population. Furthermore, a high percentage are 19- and 20-year-olds, many of whom never have been out of the United States before. Consequently, says Richard Bretzing, managing director of security for the Church, the church creates a strong community in the destination to provide support for these individuals.Knowing how crucial it is to keep people informed, the Church has a very effective communication system — so missionaries constantly are receiving communication from the United States. “One thing is necessary and very helpful: maintaining contact with the expatriate community in whatever environment they’re living. Embassies are helpful in keeping them informed about the changing security environment.” When there’s trouble, he says they depend heavily on the strong relationships they have established both with American embassies around the world and host governments.Benefiting from the experiences of other corporations and preparing to handle events in the most effective ways will make a positive impact on the financial picture. Most importantly, keeping the company safe translates into keeping employees secure.Charlene Marmer Solomon is a contributing editor and co-author of the new book “Capitalizing on the Global Workforce: A Strategic Guide for Expatriate Management.” E-mail charsol@aol.com to comment.

Global Workforce, January 1997, Vol. 2, No. 1, pp. 18-23.

Here are five tips attending international conferences:

1. Check ahead of time to see if there will be a published delegate list available. If the conference organizers equivocate, think of other ways you’ll network during the conference.
2. Take lots and lots of business cards. This is particularly crucial when you travel to Asia where business cards take on enormous meaning. Be sure to accept them and handle them with respect wherever you are in the world. In some cultures, they’re seen as an extension of the person.
3. Don’t depend on purchasing tapes of the conference unless you know a professional firm is doing the recording. Tapes might not be produced. Instead, take notes for sessions that are important to you and consider carrying a tape recorder.
4. When you register for the conference, check the policy about changing workshops that you want to attend. Don’t assume you’ll be able to change workshops once you arrive at the conference. While this is frequently all right to do in many countries, you may confront cultural differences when you try to change your plans after arriving at the conference. If they assure you it’s OK, don’t worry. However, if they seem unsure, you’re well advised to think carefully about the workshops you sign up for.
5. If you use a laptop computer to take notes, be sensitive to those around you. You’ll want to be sure it’s alright with the presenter. At the very least, sit at the back of the room and remain as unobtrusive as possible.

The city of Hong Kong pulsates with life. Activity from every corner tumbles onto the street. A colorful, moving parade of 6.2 million people accentuates a backdrop of red, blue, orange, purple storefronts and signs in Chinese pictographs. The back streets look as they could have in the 1840s when the British colonized the territory—except for the endless, honking traffic. On the waterfront facing Victoria Harbor, so many hundreds of glass-and-steel sky-scrapers tower upwards, standing watch above the constant activity on the water. Shapes are round, rectangular, even triangular. Behind the buildings are lushly covered, ragged-edged hills that support apartment buildings like so many little Monopoly™ hotels stair-stepping up to the top. It’s a teeming, vibrant metropolis.

The scene is a metaphor for global business in Asia: The juxtaposition of cultures—the old and the futuristic—driven by an urgent marketplace and its frenzied energy. Hong Kong is a conduit for cross-cultural business, where, for example, more than 60% of capital headed for China is channeled. It’s an Asian territory known to be relatively free of corruption and politically stable.

Hong Kong sets global perspective.
From June 25 through 28, more than 1,000 human resources professionals converged on Hong Kong to attend the 1996 World Congress on Personnel Management (part of the World Federation of Personnel Management Associations). They came from almost 50 countries. The numbers, as well as the distances people traveled, attest to the tremendous interest in this field, and the huge hunger for current information about the topic. The theme: “Global Challenges and Country Practices in People Management.”

Indeed, HR professionals need look no further than Hong Kong if they want to see the diverse challenges awaiting today as well as the problems lurking just over the horizon. Global trends, country-specific practices, regulations and expectations, as well as corporate cultures, will interplay throughout the world. But Asia is where it will be most intense.

The participants who came to the conference were eager to learn what they could to help them in their daily strategic and tactical HR decisions. All know that it’s the region of the world to watch in the coming decade, not only for the political ramifications, but also for emerging business and HR issues. People within the greater Asia region, and in Hong Kong in particular, are focused on the future as Hong Kong prepares for its historic hand-over to the People’s Republic of China (PRC) at midnight on June 30, 1997.

As HR professionals from around the world gathered here, conference keynote speakers focused on the implications of the present global business environment and the future of people management issues internationally. Workshop panelists focused on the very specific details of HR management within certain countries, how HR is viewed in the region and expatriate management. One of the most thought-provoking and inclusive presentations was given by keynote speaker Karl Albrecht.

Globalization and tribalization paradox.
The futurist spoke about the complexities of managing human resources in an ever-changing environment. A management consultant and author of 22 books, including “The Northbound Train: Finding the Purpose, Setting the Direction, & Shaping the Destiny of Your Organization,” Albrecht framed the current global business environment as chaotic. He talked about this chaos in terms of the Third Wave of human cultural evolution and how that impacts the workplace.

The Third Wave is an idea built around Alvin Toffler’s theoretical work in “Future Shock” (Bantam Books, 1971). The theory states there are three great waves of human endeavor, each one building upon the previous one—and overlapping. The First Wave occurred when people moved from being nomads and gatherers to an agrarian society. The Second Wave emerged when people moved into an industrialized society and relationships became more complex. The Third Wave (generally set at the 1960s), began when the newest release of energy drove human resources into information technology and the Digital Era. (Many people also refer to this Third Wave as the Information Age.)

“The Third Wave is a wave of paradoxes,” he says. “In other words, there’s simultaneous globalization and tribalization; simultaneous information that’s passing around and through all of us, and yet atomization [narrowing] of our interests and focus.”

And, there are tremendous implications for HR professionals. Simply put, companies can’t enter a new region of the world and expect to approach the workforce with the same attitudes they’ve always relied upon. In fact, it’s far more difficult than simply understanding the culture of the different society. Whether a country is in the First, Second or Third Wave affects its needs and reactions to workplace issues in a profound way as well. For example, in a Second Wave country, global HR might deal with product assembly or union-related issues. In a Third Wave country, the issue may be information security.

Albrecht explains that the current situation is driven by the recent past activities of economic downsizing and restructuring, an atomization of markets (that result in very few mass markets) and the deconstruction of business (in which there’s a disassembling of companies and countries). At the same time, commerce is borderless, there’s a tremendous sense of acceleration, and the impact of technology is ever-increasing.

All of these elements bring forth varied scenarios. Notice, for example, that companies such as Disney are acquiring other firms and becoming larger at the same time that giant companies, such as AT&T are disassembling and attempting to become smaller. The complexity continues as you realize that with borderless commerce, we’re becoming more open to different ways of thinking and doing business than we’ve ever been before. But at the same time, business is more tightly focused on selected areas. There will be greater movement away from diversification and broadening, and more frequent use of outsource providers, independent consultants and specialists. Furthermore, the idea of long-range planning is going to look more like conceptualizing what things will look like at the end of the month rather than months ahead.

“There’s an intuitive sense that since we have all this international communication and a worldwide image environment (McDonald’s Golden Arches, the Coca Cola logo, Mickey Mouse), we would think that we’re all converging at some sort of similar frame of mind, outlook and values,” Albrecht says. “But it turns out to be exactly the opposite. The differences in values, preferences and ethnic identification are actually becoming emphasized by this Third Wave phenomenon, rather than diluted.” It’s what is referred to as the Global-Tribal Paradox.

This Third Wave, he says, continues to be driven by several interrelated factors:

• Unrelenting increase of productivity
• Mixture of cultures because of business and tourist travel
• Telecommunications
• Worldwide image environment (television and mass media).

Three waves in China?
Albrecht uses China as an example of a developing country with elements of all three waves. There’s virtually no HR profession or function in that country. And yet, people are beginning to try to put one together. As bigger companies move into the Asian country, the idea of managing human resources becomes a credible concept. However, in the recent past, when it was primarily an agrarian economy with small businesses and a few large businesses owned by the State, the concept of an HR profession wasn’t even formed.

Once such a country accepts the concept of HR, and develops a management premise in terms of developing people, educating them, creating effective job recruitment and job mobility, HR professionals can begin to look at the workforce in those terms.

China, he says, actually has elements of all three waves happening simultaneously. On the one hand, it hasn’t really achieved the level of agricultural productivity that the developed economies have, so it hasn’t completed the first stage. At the same time, it has begun to develop Second Wave industries, such as steel and automobile manufacturing, along with a small, developing entrepreneurial sector that’s allowing individual farmers and merchants to sell their goods in a somewhat freer market economy. So, you have evidence of the two elements.

“And now, China is struggling to figure out its stance with respect to the Third Wave. You have a situation in which the leaders of China are very much in a quandary about opening up global information, images and communication,” says Albrecht.

The complexity of China is instructive for global HR. Managers who had an expectation that people operate according to a certain kind of work style or work ethic will face enormous difficulty. Managers can’t just assume people are prepared to compete with each other for economic status; nor can they assume that patterns of responsibility and organizational functioning are equivalent to what they’ve known from their past experiences.

Some of the more obvious challenges include recruiting and educating the workforce. Others relate to the strategic plan of human resources involvement. “You have the question of do you essentially clone a Western business structure or do you try to enter into more of a Third Wave concept and partner or network a set of alliances with a company already established in China,” says Albrecht. Obviously, the approach you take will make a big difference in your human resources approach. He believes that cooperative partnerships that promote smaller, more flexible businesses hooked together is more likely to occur. Since this already is evident in many ways by the atomization of Third Wave environments, it seems to be a natural progression as Third Wave companies enter Second Wave environments.

If, however, multinationals form business partnerships—bringing in technology, marketing and finance expertise—and also hook up with a group of partners in the local country (choosing a flat organizational relationship as opposed to the traditional hierarchical one), nobody is in control. Work is accomplished not by command-and-control, but by influence. So this gives HR people a different set of issues to contend with. For example: How are you assured of the labor force talent; what training and orientation is required to be sure the company can produce a top quality product; how do you handle training and development when the people aren’t even on the payroll? Moreover, what kind of work standards do you set? What expectations can you have? It’s quite profound and gets to the very nature of how you define work, define occupations and define moving up through an organization.

Says Albrecht, the concern is to see if we can manage well enough in this chaotic environment to stay on top of things and handle future possibilities. In other words, as we move into the international arena and begin to experience cultural differences, we simultaneously become more aware of, recognize and value our individuality. Consequently, our differences become more accentuated. Given these differences—as well as the continuing differentiation of products and focus, accelerating technology and the increased use of partnering and outsourcing throughout the business environment—more complex responsibilities fall to senior management. Global human resources managers, especially, provide the critical link that will hold together the various workforce participants. The trap, he says, is to apply Second Wave thinking to Third Wave challenges.

It’s at global conferences of this sort that theorists, practitioners and other professionals come together to share thoughts and insights. Through this synergy, the complexities that await will indeed be challenges and hurdles to overcome, but not insurmountable blockades.