Author: Charlene Solomon

You may never have stepped inside New York City’s The Pierre hotel, but you certainly know it by reputation. The Grand Dame is quiet opulence. Plush lobby, imposing crystal chandeliers, handpainted ceilings that remind you of the Sistine Chapel in Rome. Its elegant air and dignity create an exquisite setting. But whatever its physical beauty, the Four Seasons’ Pierre is known for its customer service. Housekeepers help you before you even ask. Uniformed elevator operators offer you a smile. And the concierge may call you by name.

Not too far away on the upper East Side is another New York institution—the New York Hospital-Cornell Medical Center. Patients are known to pay hefty sums—nearly $2,000 for a private room—for the center’s excellent health services. But if you were to view a hospital as a hotel for sick people, why couldn’t the hospital’s customer service become just as renown as its medical care? It can, thanks to the vision of Herbert Slotnick, a businessman who channeled a personal tragedy four years ago into a partnership between the two service-oriented institutions. Slotnick recognized that since both rely on frontline employees to satisfy their clients, The Pierre could help perform surgery on the hospital’s customer-service operations.

Collaborations require vision.
The partnership between The Pierre and New York Hospital was born several years ago. People reverently recount the story. In 1991, Slotnick’s wife was dying from cancer at New York Hospital. During her final days, he stayed at The Pierre. Every day he would travel the few miles from Fifth Avenue to the upper East Side to visit his wife. At night, he’d return to The Pierre, where he was greeted by name and served dinner in the Rotunda Room. He’d often listen to soft music to relax. The staff who knew him would inquire about his wife’s condition. And each night Herbert Pliessnig, then the general manager of the hotel, would call to talk with him.

Each day, Slotnick returned to the hospital. Although he found the medical care to be excellent, he noticed the attention to personal service was in stark contrast to his nightly experience at The Pierre. Hospital employees might have been experts at what they did, but their training didn’t seem to have emphasized hospitality.

Slotnick’s experience—both the medical treatment his wife received at the hospital and the personal care he received at the hotel—convinced the businessman to do something significant for the hospital. In addition to a generous donation in his wife’s honor, Slotnick brokered a collaboration between the two institutions to prove one thing: A hospital could provide its patients both high-caliber medical service and the kind of personal attention showered on guests at a first-class hotel like The Pierre.

Slotnick then met Merife Hernandez, a one-woman dynamo who serves on the hospital’s board of governors. Hernandez immediately recognized the brilliance of Slotnick’s insight. She jumped on the idea of a business partnership. Having been hospitalized herself several years before Slotnick’s wife, Hernandez had already felt the need to develop a hospital with a more hotel-like ambience. She started the Environment Committee—a group of decision makers that included the vice presidents, the management team and all of the department chiefs who were tasked with improving the patient’s non-medical experience. Slotnick also introduced Hernandez to Pliessnig. Together they planted the seeds for the alliance.

Strange bedfellows? Not at all. Health care or hostelry—both require sound financial positions. Indeed, from 1988 to 1991, the hospital went from being $57 million in the red to being $2 million in the black. Hernandez immediately saw the bottom-line benefits of taking its customer service even more seriously. She pursued the partnership with the tenacity of a surgeon. “The beauty of the collaboration with The Pierre was its fantastic ideas on customer service and employee relations. How you treat your employees is how they in turn will treat the clients—as patients or guests.” That includes empowering employees by having open-door management policies and by paying attention to employee and guest facilities, she says.

Isadore Sharp, chairman, president and CEO of the Four Seasons Hotels and Resorts, also recognized the prospects of mutual gain. He later told a group of senior executives and physicians at the hospital that health care and hostelry are service industries operating in a highly competitive world that focuses on budgeting, market positioning and cost containment. And frontline personnel must provide excellent customer service.

Granted, there are some differences in size, mission and accountability. For example, The Pierre employs 650 employees. The New York Hospital has more than 7,000 personnel. The former is a for-profit enterprise. The latter is a not-for-profit organization that provides health care for patients from all walks of life, including those who may not have the ability to pay. It also answers to OSHA and other government agencies, unlike the hotel, which operates with a freer hand. Nevertheless, “Both depend on our frontline people to satisfy our customers,” says Sharp. So in order to facilitate the fruitful exchange, the next step was to bring in additional key players from both sides.

The Pierre offers a healthy tray of HR tips.
Shelley Komitor, former director of human resources at The Pierre (now at the Four Seasons New York), remembers when Pliessnig introduced the venture. “I thought it was a great idea,” she says. “We discussed it among our division heads in public relations, rooms, and food and beverages. Then we decided to meet with our [hospital] counterparts.” Komitor initially spoke on the phone with Regina Allen, vice president of human resources for the hospital. Both women agreed to hold a meeting at The Pierre to discuss the respective services. Representing The Pierre were Komitor, the employee relations manager and assistant director of HR. On the hospital side were Allen, the director of recruitment and director of training. “At that meeting, both sides spoke about our areas of expertise and what we do. We did most of the talking because [New York Hospital representatives] wanted to hear what we did,” says Komitor. The discussion covered a lot of ground—including recruitment, training, employee relations and communication.

“The Pierre’s focus on the employees is to do unto others as you would have them do unto you,” says Allen. “So there’s a natural tie between the two institutions in terms of how we regard our employees and our customers. They’ve been focused on customers longer than we have. And we had a lot to learn in that area. We’ve been focused on giving excellent patient care without the added piece that these [patients and visitors] are also our customers.”

Before the four months of exchanges between HR and frontline employees proceeded, the hospital made its own diagnosis. It chose a few areas in which to stop doing business as usual and look at ways to improve its operations by adding a customer focus. Among the initial areas that worked together were the hospital admitting services and The Pierre’s reservations and front desk. It was clear they had the most in common as the first point of contact.

John O’Brien, currently director of admitting at New York Hospital, was one of the individuals involved. “We spent a day with the director of guest relations, looking at the facility and talking to people at different stations—the cashier desk, reservations and check-out counter. As the director of guest relations explained her interaction with other aspects of the hotel, we could see obvious parallels in the basic principles. We are the meeters and the greeters, the first people patients see when they come into the hospital.” Soon after that exchange, hotel housekeepers talked with hospital building-services supervisors. And The Pierre’s executive chef visited the food and nutrition services director at the hospital.

The more O’Brien observed The Pierre’s customer-service program, the more he began to adapt it to the hospital’s needs. “The way [The Pierre] approaches customer-service training was the best I’d seen because it could be very tailored to the task environment,” says O’Brien. “They have specific guidelines [and scripts] about what customer service means in the work people do day to day,” he says. The hotel’s approach, therefore, inspired the hospital to make some specific changes in its admitting and discharging procedures, employee-training program and hiring procedures.

For example, the housekeepers have continuous contact with customers and therefore are considered frontline employees. Previous to the collaboration, the hospital was structured so that after housekeepers finished cleaning a room, they would go to the unit clerk who would contact admitting. If the clerk was busy, it might take hours simply to contact admitting to notify the staff that the room was ready. Now, when the housekeeper finishes cleaning a room, he or she calls admitting directly to say that bed 318A is ready. The open-room notice enters the system immediately, and the next patient quickly is accommodated.

The hospital also streamlined the discharge process and created nurse managers who would be responsible for a wide range of duties on the floor. Frontline employees were taught that they should treat patients as they would want to be treated. For example, housekeepers knock on the door before entering. They introduce themselves by name and ask if it’s a convenient time to clean the room. Escorts who take patients to the operating room introduce themselves, explain what they’re doing and assure the patient that they have all the necessary charts and paperwork with them as they wheel the patient down the corridors.

Instead of a generic customerservice training program, the hospital now has specified training for distinct departments—for admitting representatives, reservations and pre-admitting representatives. For instance, the hospital has a chaplaincy service that reaches out to patients. One question in the admitting process is about religion. In the new customer-service packet for admitting personnel, a recommended script says, “On behalf of the hospital’s chaplaincy service, which is here to meet the needs of our patients, would you like the chaplaincy to assist you in any way?” This takes the edge off the question: “What is your religion?”

Another scripted scenario is how to deal with conflict and angry customers. O’Brien added this section to every training packet because no one knows who will be the first person to encounter an angry patient. The script suggestions might not solve the problem entirely, but they help the employee point the customer in the right direction. Before, the employee would have said, “You’re going to have to talk to my supervisor.” Now, says O’Brien, the employee tries to diffuse the situation and is encouraged to ask, “Can I do something to help you?” If the answer is yes, the employees are empowered to do it. “If it’s beyond their scope, they can figure out who’s the appropriate person and take the patient to that person.”

Customer-service training at the hospital today is a mixture of lecture, question-and-answer sessions and role playing. It involves roughly three one-hour sessions in a group, and an additional individual half-hour with a supervisor who explains the material provided in the department-specific packets. Then, there’s informal follow-up.

In addition, training is on a departmental level. New-hires receive a customer-service training program and packet as well as the general orientation program. This approach has been a factor in the whopping patient-satisfaction ratings for the admitting department. A 1995 patient survey indicates a satisfaction rate of 98%.

Such high ratings are attributable to the hospital’s training from The Pierre, which hires for attitude and conducts several interviews in which managers look for 30-second impact. This means that within 30 seconds, the potential employee must have made a personal connection. Was the applicant smiling, friendly and a people-person? In fact, The Pierre’s owner, the Four Seasons, has been known to interview as many as 50,000 applicants for 400 positions. And typically, it schedules up to five interviews with some individuals.

Of greatest importance is a customer-service orientation. “We’ve strengthened the customer-service aspect since we’ve started the alliance with The Pierre,” says Allen. Because the hospital is heavily regulated, applicants must undergo thorough background checks anyway. But now, telephone reference calls concentrate on a person’s attitude. “We focus on attitude with specific examples—asking how a person would handle a difficult customer or respond when asked to do something that was beyond the scope of one’s job,” says Allen. And although it doesn’t primarily focus on technical skills, the hospital usually does have two interviews in which managers evaluate these skills. Allen explains, “We’re doing more selective hiring as a result.” By placing the right person in the right job, the hospital is taking a more proactive approach toward its customer service.

A win-win partnership.
Although The Pierre provided most of the training, it also benefited from the collaboration. “In every interaction we had, we were learning so much about each other,” says Komitor. “Speaking to peers who basically do the same things, but in such different environments and industries, was eye-opening. Yet, we’re still HR professionals who work with the same concepts,” she says. And as is often the case when you’re teaching someone, you gain a greater awareness of yourself. That was certainly true of the staff at The Pierre. “Seeing how we could help [New York Hospital] brought about a sense of purpose and rededication to the [hotel’s] philosophy,” says Didier LeCalvez, current general manager who also was involved in the training. “When you show people how to do something, you look at your own process.”

What’s more, promises Hernandez, “Once we get up to snuff, there are a lot of things we can actually do for The Pierre.” The hospital is talking about helping the hotel serve spa cuisine with the input of Dr. Richard Rivin, chairman of the department of nutrition. Also, there’s the possibility of working together to provide some health-care services to The Pierre employees. Most significantly, they’re creating a Diagnostic Association, in which both sides work together so that people from everywhere in the world can come to the New York Hospital for a complete health checkup (much as people do at the Rochester, Minnesota-based Mayo Clinic) and spend their evenings at The Pierre. All three ideas would benefit both organizations, which is the essence of a successful alliance.

“Furthermore, you have to know your needs,” says Hernandez. “If you need help with financial processes, you go to an accounting firm. Our big need was for hotel-type services. We knew The Pierre’s reputation.” So, the match has to be excellent in terms of need and expertise. But the most important characteristic of a successful alliance, she says, is that “the people have to be predisposed to the idea. You have to hit it lucky with the personal relationships.”

And where is Slotnick these days? Serving on the New York Hospital’s board of governors’ special committee on hospital environment—creating more legends in the Big Apple.

The scene is one of sharp contrasts. Ten people—geophysicists, geologists, engineers, oil-drilling pros and production experts—meet in a modern boardroom looking out onto a lush, equatorial garden of palm trees, ferns and tropical shrubs. But the tropical paradise isn’t all it appears to be. A tall brick wall topped with jagged pieces of broken glass surrounds the compound.

The team of people inside mirror the contrasts of the environment. They’re from Dallas-based Maxus Energy (a wholly owned subsidiary of YPF, the largest Argentinean corporation in the world) and Maxus-Southeast Sumatra (SES). Teaming up are Americans, Dutch, British and Indonesians—people whose cultures are as contradictory as the serrated wall to the tropical garden of the office complex. Some of these people believe in individualism, others believe in collectivism; some believe in equal opportunity based on achievement, others believe status is inherited. Politically, culturally, religiously—this group is composed of disparate elements.

The team is one example of how two Maxus groups formed a cross-functional, cross-cultural unit to pursue a common goal: To maximize oil and gas production. As if working together wasn’t formidable enough, they faced an enormous business challenge—to stave off the typical drop in production that occurs after the first few years on an oil field. The companies expected a 15% decrease in production.

Could the team stabilize production and avoid the dramatic decline that was anticipated? Working together, they did. Capitalizing on Maxus’s technical expertise and SES’s cultural tradition of teamwork and worldwide experience, the team not only avoided the 15% reduction, but leveled off production and even helped the companies add oil reserves to their stockpiles—an almost unprecedented achievement.

Indeed, work teams already have become an established institution domestically, and now they’re making their way into international projects. It’s little wonder. Global teams address certain problems and affect the bottom line in ways that are fundamentally different from the ways individuals approach the same situation. They maximize expertise from a variety of people, provide companies a more accurate picture of international customers’ needs, and profit by the synergy necessary to unify the varying perspectives of different cultures and different business functions. It all adds up. “You’ve got to utilize your human resources much more efficiently today if you’re going to stay on top of it. That’s why everyone is heading toward the team concept,” says Steve Ginsburgh, manager of Organization Services and Employee Development at Maxus Energy. “When a project requires brain power, teams are much more efficient.”

Because of these factors, global teams will become as prevalent as Hondas manufactured in America, Motorola beepers marketed in China, and Big Macs™ made and served in Saudi Arabia. HR managers with international responsibility know that global teams will become an integral part of the developing global work force. The fundamentals of global-team success aren’t very different from the practices that work for domestic work teams. But there are more variables. Overlay cultural behavior and expectations on the roles of communication, team leadership and group dynamics, and you immediately understand. Moreover, there are logistics to overcome: challenges inherent in working in different time zones, lots of travel and busy, conflicting schedules.

“The beauty about global teams is that they’re reaching for the next stage,” says Tony Barnes, director of human resources development at the Japan Center in England. Barnes, who worked for decades with Edward Demming on team process in Japan, believes that global teams are the next wave of corporate development. “I think corporations as we’ve known them have actually run their course and are beginning to break into autonomous business units, so the decisions are in the hands of the people carrying out the work. Global teams are one way of cross-pollinating—they move people who are successful in one branch of the organization to work with people in another country and another branch of the organization.”

In these situations, people develop themselves as well as help develop others. “It’s a program of both learning and teaching that enhances the ability and taps into the creativity of all people in an organization,” says Barnes. And like any other successful organization, teams evolve as business conditions change, and as their members’ comfort levels with one another grow.

To become productive units, global teams must evolve.
Sylvia B. Odenwald, chief executive officer of Odenwald Connection Inc., a Dallas-based international consulting firm, knows about global teams. As author of “Global Solutions for Teams,” she has studied them for years. Her analysis: GlobalWork teams (her phrase) move from being an assortment of individuals on a chaotic collision course through a state of coexistence into a collaborative phase where they truly work together as a team.

There are four phases. In Phase One, each team member comes with his or her own expectations, culture and values. Most people take their cultural values for granted—they often do not think of them as being specific to their society and different from other people’s expectations. So the first step involves team members recognizing that values are merely a set of norms particular to their society; they’re not universals.

Phase Two comes after this self-awareness. Individuals begin to respect the cultures of other team members. While acknowledging problems and differences, they’re willing to listen to others and move into a neutral zone where they appreciate others and work together.

During Phase Three, team members begin to trust each other. They start to share knowledge. At this time, they begin to focus on achieving team goals. And then, in Phase Four, the team begins to work in a collaborative way. Corporate vision and strategy infuse the team with energy. Cross-cultural differences become a competitive advantage. “During this phase, people begin to truly work together. They learn day by day how to negotiate team milestones, develop reporting procedures and meet deadlines. The real challenge is to find something that works for everybody. It might not be exactly what everybody wants, but it allows the team to accomplish its goals in a collaboration that works,” Odenwald says.

Maxus’ teams are a good example of moving from phase to phase. Its self-directed teams received clear guidance from the company, which helped in its success. The company established the following principles: Limit team size to 10; create representation on each team of varied functions and cultures; clearly define the role of the teams; understand the function of the team leaders and team managers (that of facilitators); allow experimentation with rules and structures; establish clear operational guidelines, including specific times for meetings and finished reports; and thoroughly monitor the team’s progress through updates and reports. Equally important, Maxus provided its teams with technical, verbal, monetary and decision-making support that helped them to meet their objectives.

Pivotal to their philosophy: Each team is multi-dimensional in function and in culture. In other words, Maxus promotes cross-functional solutions and gets input from all members, regardless of their discipline. In this way they value—and make use of—differences.

Choose the right team leaders and members.
In order to create an effective team environment, companies must begin by selecting the right team leaders. According to Odenwald, leaders must be flexible, be willing to support the team process, have a desire to help the team work together, understand team cultural factors, be able to listen and communicate, and be able to understand other members’ behaviors.

Team leaders are facilitators. They help with goal setting and actively seek input from all team members. They’re not, however, decision makers. They’re responsible for holding and conducting meetings and producing careful reports that keep everyone informed.

Team leaders must also develop a global mindset or cross-cultural competence, according to Danielle Walker, co-author of “Doing Business Internationally” and president of Princeton-based Training Management Corp., a global management and cross-cultural consulting firm. Leadership qualities for global managers will include the capability to work in and with international teams. This means they must respond quickly but thoughtfully to the complexities that demand joint problem solving and a more collegial style of leadership.

Once a team leader is selected, companies must also choose the right team members. Neglecting this step will diminish optimal performance. Indeed, selecting the right people (as well as training them later) for team performance is as crucial as hiring the best employees to begin with. Managers frequently take people into the company and simply move them into a team slot.

But, to be successful, there’s more to it; skills count for a lot, but they aren’t everything. “You can teach technical skills more easily than you can change a personality or develop a good communicator,” says Odenwald. Interpersonal skills, flexibility, good communication skills and the desire to understand other cultures are easily as important. Successful teams have members who come from a variety of functions, experience levels and cultures.

Allergan Pharmaceuticals, with global teams throughout its organization, selects its team members carefully. These teams help Allergan improve its products’ time-to-market, create effective marketing strategies for all of its customers around the world and develop an organization that taps into the resources of its entire employee base.

The Irvine, California-based business has several different types of teams: new-product development teams, product-launch teams, regional-management teams and functional-guidance teams. And these teams are all cross-functional. For example, the regional teams are comprised of the functional heads—HR, compensation and benefits, organizational development, finance, and marketing—for that region.

As teams form, the role of human resources is critical. “One of our goals is [to determine] how HR can support and accelerate the business objectives of the organization,” says Lorna Larson-Paugh, director of human resources for the Northeast Asia and Pan Asia Regions. “Part of that is through dovetailing our strategic plan with the business’s strategic plan and translating that to establish the foundation of a human resources group to hire and develop people. I can’t do it by myself. I need to utilize other team members and, sometimes, to leverage resources.”

Teams also shorten the learning curve. For example, for Larson-Paugh, teams are an efficient way to quickly understand companywide compensation and benefits issues and align them with the business philosophy to create reward systems that make sense on a local level. “When I can talk with people in a similar situation from different parts of the world, I’m not reinventing the wheel; I’m gaining leverage from their experience.” Sometimes that means talking with the team members about compensation and benefits policies—other times it means talking with people about recruitment possibilities for 50 individuals in Hong Kong. Whatever the issue, it’s always critical to have present the team members with the skills and knowledge you need.

Many of Allergan’s employees are on six or seven different teams. Development teams are made up mostly of research-and-development people; product-launch teams are composed of marketing people and others chosen by their regional representatives. “Allergan is quite a global company. More than half our sales come from countries other than the United States,” says Hans-Peter Pfleger, director of therapeutic strategic marketing. “International business people know they have to understand countries around the world. We have training on communications skills, diversity, different cultures. Bringing people together in a team always takes more time than having those same people work on their own, but it pays back later on when you have a development plan or a launch plan that fits global needs, not just the needs of one or two countries.”

Aim for a common vision.
Intel Corp. in Santa Clara, California, learned that helping team members achieve success requires shared vision and defined responsibilities. The company has been using global teams for more than a decade. It’s one tool in the company’s arsenal for continued achievement as a high-performance organization. Teams are used for a medley of projects: they formulate and deliver sales strategies for specific products; they develop new products; they manufacture and produce microprocessor elements. Whether they work on sales campaigns or quality-test procedures, Intel’s teams are frequently composed of a combination of employees from many of the company’s locations in Ireland, Israel, England, France and parts of Asia.

The composition of the teams is always business-oriented. For instance, a microprocessor may be manufactured in one facility and assembled in a plant in another country, which requires interaction among various people. Or, a design process may require people from multiple sites to be working simultaneously on the same project. Many of the teams come together quickly, do their work, then disband and regroup with other team members. Typically, Intel’s teams work across great distances, geographic borders and cultural boundaries. It’s not unusual for people from six or seven different national cultures to work together to complete a project.

This situation prompted Sharon Richards, intercultural training program manager at Intel’s Santa Clara headquarters, and other Intel University training managers (from France, Hong Kong, Israel and the United States) to form a global team and study some of the company’s high-performance teams. Richards’ team was trying to determine specifically what made those high-performance teams so successful. They interviewed more than a dozen such teams. “One of the most important discoveries we made is that teams need very simple, basic processes and procedures,” says Richards. “It’s very important to set clear expectations and to have clearly defined goals, roles and responsibilities.”

Although this may seem obvious, when people are working with others of different functional backgrounds and across cultures, the complexities of interaction become even more difficult to manage. Clear goals need to be established and constantly reinforced. Having a focused vision is critical if the team is going to move forward. Whenever the vision is unclear, says Richards, “the Intel culture is the glue of global teams. It’s the umbrella that enables them to get their work done by always providing a point of reference.”

Intel’s teams, like Maxus’s, view the use of cross-cultural differences and cross-functional expertise as strengths. “For the team to be effective, the members had to really identify and harness the different cultural strengths and what contributions each member could make to the team,” says Richards. Intel has a strong intercultural training program to facilitate cross-cultural adeptness. The culture-specific training exposes team members to some theoretical underpinnings of intercultural communication and societal expectations.

Another way in which Intel’s successful teams assure clarity of vision and group understanding of each person’s responsibilities is to have several face-to-face meetings early in the development of the team. These early meetings build trust and develop relationships that establish the interpersonal foundations that help make later long-distance meetings—through such means as teleconferencing, videoconferencing and electronic mail—go much more smoothly. “If you’ve had early face-to-face meetings, then you’ve established a ground work to move from and it’s easier to work with the remote technologies to accomplish a task,” says Richards.

The meetings themselves must have a clear agenda. They must include the correct people—involving not only the people who will implement but also those people whose input is important. In other words, successful teams invite key players to meetings, even if they don’t really need to be there, because they’ll be helpful throughout the group process.

Furthermore, written minutes of the meeting must be distributed immediately afterward. These minutes help ensure that everyone understands the tasks and agreements that were made during the meeting. These records give individuals direction about checking back to monitor progress. Intel’s teams schedule regular, ongoing meetings, conducted through a variety of technological formats, such as videoconferencing and teleconferencing.

Sound complicated? Global-team logistics are manageable. Most experts agree that those first face-to-face sessions are crucial in overcoming later logistical problems. The complications of time zones and travel pressures make it even more challenging to ensure team members clearly comprehend goals and begin to develop a bond of trust and understanding among one another. “This is the time to develop the group’s charter, to project milestones and critical success factors,” says Jill George, a senior consultant at Development Dimensions International in Bridgeville, Pennsylvania. This planning minimizes the frustrations when cultural differences and language barriers begin to emerge.

Logistically, says George, before you can have an effective global group, you have to have an environment that makes it easy for people to share information, get feedback from one another, and communicate clearly. “If the technology isn’t there—if team members don’t have groupware so they can share documents, or E-mail and videoconferencing capabilities so they can communicate rapid-fire—people will find it a physical barrier. I think employees become frustrated when they’re asked to work together but encounter some delay based on technology,” she says. This is especially the case when people are dealing in languages other than their first language and when they’re negotiating cultural differences.

Other aids to logistical problems: a group-based publication which serves to inform all team members and keep them feeling empowered and part of the work processes, meetings that take place in conjunction with other conferences, standard meeting times that are sacred and that are never changed. For gatherings that require travel over long distances, greater lead time lessens the frustration for participants and ensures that they’ll be able to attend.

“Although the logistics are more difficult, it’s rewarding to be part of a global team,” says Intel’s Richards. “It’s really a learning experience. You get exposed to other ways of thinking and problem solving, other ways of proceeding, and when you are working on a big project, you get the opportunity to develop several lasting, long-distance relationships,” she says.

And, from the company’s perspective: “It’s only through their people that companies are going to take the customer’s breath away and give added value to the customer beyond what their competition offers,” says Barnes. “Businesses can’t stand still. They’ve got to be continually working on this and fine-tuning it to stay ahead.”

How did affirmative action begin?
In 1965, President Lyndon B. Johnson signed Executive Order 11246 that requires “employers doing business with the federal government to develop affirmative-action plans to assure equal employment opportunity in their employment practices.”

In a typical large corporation, affirmative action begins with adopting a strong policy of equal employment opportunity, followed by monitoring to identify possible discrimination.

Affirmative action was simply a commitment by a company that it would take positive steps to ensure it wouldn’t discriminate. It has evolved from posting notices that declare a company won’t discriminate to monitoring applicant pools to see that they’re rich with women and minorities. This monitoring also helps the company see if its efforts are sufficient to attract all kinds of qualified people.

When problems are identified, companies establish employment goals that are targets designed to ensure that women and minorities are represented in all segments of the work force. Many companies develop and implement programs that enable individuals to compete with others on as equal a footing as possible. These programs tend to center around recruitment, training, development, mentoring, family assistance—all designed to expand opportunities for qualified people.

Three main rationales for existing affirmative-action programs: Compensation for past discrimination, correction of current discrimination and diversification as an end worth pursuing in and of itself.

What is the difference between affirmative action and diversity?
Affirmative action is quite different from diversity. Affirmative action is legally driven and is about trying to achieve equality of opportunity by focusing on specific groups. Diversity efforts focus on managing and handling the work force you already have. One key difference is that managing and valuing diversity gives your organization a competitive advantage. “One is to right wrongs, the other is a strategic advantage and a business imperative,” says Anita Rowe, partner at Gardenswartz & Rowe, a Los Angeles-based diversity consultant firm. Rowe sees diversity as much more inclusive than affirmative action.

You can view affirmative action and diversity management as a continuum. Nondiscrimination means the company will not discriminate. Affirmative action means the company will take positive steps to ensure that it doesn’t discriminate. Then, you move into the next stage—proactively promoting a diverse and inclusive work force. “This isn’t necessarily because it’s the legal thing to do or even the morally right thing to do, but because there’s a legitimate business reason,” says Rowe.

Managing and valuing diversity are the next steps. Managing diversity focuses on managing your work force, which just happens to be diverse. The motivation, says Elmer Jackson, general director of employment relations for General Motors North American Operation in Detroit, is that maintaining a more diverse work force gives your organization a competitive advantage. It’s a business orientation, rather than a legal or moral one. “We define it as the process of creating and maintaining an environment that naturally enables all of our employees, our suppliers and our communities to fully contribute,” Jackson says. The more diverse your work force, the better your decision-making. Seen as a benchmark, especially for the manufacturing community, GM’s total minority representation is about 22%; total representation of women in the company is 20%.

Does affirmative action mean you must have quotas?
No, quotas are illegal. The only exception to this is in specific legal cases where courts mandate them based on past active discrimination; quotas may be imposed only by judges. All guidelines and mandates regarding affirmative action state clearly that candidates must be qualified. Affirmative action simply encourages the development of ways to seek out and promote well-qualified candidates.

How do goals and quotas differ?
Goals are guidelines; quotas are imposed by the courts and must be achieved.

Isn’t preferential treatment unfair?
Individuals are rarely evaluated on merit alone. Athletes, children of alumni and people who endow universities often receive special treatment. In business, who you know, the contacts you have, the strings you can pull all influence the positions you might be hired for, and certainly affect your rise in the organization. Preferential treatment may not be fair, but it’s not new and didn’t begin with affirmative action.

What are set-aside programs?
These programs (like the SBA’s 8[a]) set aside some government contracts in a pool for minority and female-owned businesses. They allow those organizations to win contracts even if they don’t come in with the lowest bids. Other programs (such as those in most workplaces) don’t require special preferences to specific groups, but direct companies to count employees by race and sex, and be prepared to justify why numbers differ markedly from percentages in the labor force as a whole.

Isn’t there a lot of reverse discrimination in the workplace today?
The number of cases is small. In a report by the Labor Department and Rutgers University that reviewed discrimination cases between 1990 and 1994, less than 3% of the federal discrimination cases were filed because of reverse discrimination.

What is the California Civil Rights Initiative, and how did it start?
This initiative, which will be on the 1996 California State ballot says, “Neither the State of California nor any of its subdivisions or agents shall use race, sex, color, ethnicity or national origin as a criterion for either discriminating against or granting preferential treatment to any individual or group, any operation of the State system of public employment, public education or public contracting.”

If American businesses are going to thrive in today’s global marketplace, costs—and the effective use of overseas assignments—take on increasing importance. While the numbers of expatriates may dwindle as a company manages its operations with local nationals, they’re crucial early-on. Compensating expatriates in a cost-effective way that maximizes performance is one key element to accomplishing the business mission.

“Everybody’s talking about expansion. You have to have people out there to expand into the globe,” says Gary L. Parker, managing director, ECA Windham, LLC, a New York-based firm that collects worldwide compensation information. “It doesn’t happen overnight, so if you’re a U.S.-headquartered company, you want your nationals to take the corporate message out.

“On the other hand, people are saying they have to reduce the humongous costs, so they want to cut staff. These goals are diametrically opposed. Businesses want to cut back on people just at the time they’re trying to expand globally.”

Smart companies balance business objectives with the compensation package—base salary, taxes, allowances, CO-LAs, housing and reimbursable expenses.

Compensation policies should support business objectives.
The basics of international compensation for expatriates include: the different methods of calculating payment, remuneration packages and cost-containment alternatives. Expatriates are traditionally a small but very important part of the initial staffing of a global organization. But they’re expensive. Global compensation costs somewhere between three and five times the total of one’s home salary, allowances and taxes. No wonder organizations are scrutinizing their international assignments. An effective policy takes all of these factors into consideration and fundamentally supports the objectives of the business.

“The most important thing is to know what you’re trying to accomplish,” says Calvin Reynolds, president of New York-based Industrial Relations Counselors, Inc. (IRC) and a senior counselor at Organization Resources Counselors, Inc. (ORC). (He was previously ORC’s senior vice president.) Reynolds says one must determine the kind of mobility important to the organization. You should consider whether you want the expatriates to come home, stay out or move from country to country. Time frames also are important; expats may stay for long or short periods. “Until you figure out what you’re trying to accomplish in terms of mobility and staffing, it’s impossible to develop a sound international compensation policy,” says Reynolds.

In the beginning, it may seem premature to think about staffing strategies. The initial focus is to get a few qualified people to agree to leave, prepare them culturally, pay them and administer the compensation in a way that works for the company. Once an assignee has been selected, Reynolds says companies think, “Now, how do we bribe [him or her] to go and do it?” Companies don’t think about it from a career or business perspective. “When somebody first starts out, typically you negotiate a deal that gets them to go. Sometimes it works and sometimes it doesn’t,” he says. “That usually influences whether or not a company stays in international business.”

The wisest step is to consider the business strategy—why you’re sending people abroad. “When senior management sees all the costs, they can stop and ask, ‘Is this million-dollar price tag on somebody making $100,000 a year going to have payback?'” says Bill R. Sheridan, director of International Compensation Services, National Foreign Trade Council (NFTC). “Are they going to generate a million dollars worth of revenue? Are they bringing some technology or knowledge into the other operating unit that justifies that cost? That’s the dilemma, historically.”

Assignments vary in length and should correlate to business objectives. They can be: short-term, usually less than one year; average or mid-term, between two and five years (the most common); and long-term or indefinite. Some companies also have business trippers, or extended travel that lasts up to three months. In addition, there are individuals who constitute a cadre of international employees who may never return to domestic headquarters, yet aren’t considered a long-term employee in one specific destination, either.

There are numerous reasons companies send expatriates, each of which has implications for the way they’re paid. For example, if an expatriate is relocating indefinitely, you might consider a compensation strategy based on host-country salaries. It’s crucial to understand not just what the company’s goals are and why it’s sending expatriates, but, when figuring compensation, remember that employees, too, have personal reasons for wanting to take an international assignment. Among them are the possibility of career advancement, skill development and personal travel interest.

Companies typically send expatriates for the following reasons:

• To make a technology or skill transfer. This would be an opportunity to either teach or learn from people in the destination, usually for a specified time or project

• To fill a special managerial skill that’s lacking at the destination

• To form a link with domestic headquarters, as a way to either develop or impart a uniform corporate culture, or to provide a guiding presence for the operation

• To enable an employee to acquire an international perspective and learn about the company’s global scope

• To give senior management a global opportunity by monitoring such operations.

Use a variety of methods to calculate compensation.
There are several methods companies use for determining compensation: the Balance-sheet or Home-based approach; the Host-based approach; the Better-of-Home-or-Host approach; and the International approach. The most common approach used in the United States is the balance sheet, according to ORC, the New York-based international human resources consulting firm.

In fact, in its 1994 Worldwide Comparison of International Policies and Practices, ORC found that approximately 85% of American firms actually use this method. Many European companies will refer to this as a home-country build-up (the survey found that in the United Kingdom and France, it was used 69% of the time).

The balance sheet starts with a home-country salary (wherever that home base is) and builds upon that foundation. One reason it became so popular is that it facilitates mobility as employees move from headquarters to host-country operations. It also aids repatriation. The underlying philosophy of this approach is that expatriates shouldn’t lose or gain in spending power simply because they’re transferred to an international location. The balance-sheet approach equalizes purchasing power. The balance sheet starts with the home salary, minus a hypothetical tax (which yields a net income). Then, allowances (or differentials) are added to make up the difference between costs in the host and home country so the employee retains approximately the same standard of living. Finally, to protect the employee’s spending power, add the appropriate amount of local tax so the employee won’t be paying for it out of pocket. Tax is levied against the allowances and against the payment for taxes.

Though the balance sheet is the most frequently used method, the drawback can be its cost. “While the balance sheet seems straightforward, there are as many [variations] as there are companies using it,” says Reynolds. “If you move somebody from the U.S. to a high-cost country such as Japan, or to some low-cost countries in South Asia, from a purchasing power perspective, it shouldn’t make any difference if applied properly. However, the way some companies apply the balance sheet may allow windfalls to the employee in taxes and housing allowances, or even in goods and services.” There are a variety of ways to control those costs, he explains. The most important is to limit the level of housing an expatriate can rent. “If an expatriate is in Tokyo, it will cost in excess of $150,000 per year to rent a house comparable to one you can get in the States.”

Another drawback of the balance sheet is that it may create situations in which there’s inequity between expatriates and local nationals, and even among expatriates who come from different countries. Furthermore, “Even though this system is well accepted and easy to explain to expatriates, administration in volatile currency countries can be overwhelming,” says Carolyn Gould, senior manager, expatriate compensation consulting, Price Waterhouse LLP. The 1994 Price Waterhouse, 421-company survey of expatriate compensation and tax-balancing policies indicates that companies need one full-time administrator for every 30 expatriates. “Companies may have to update packages on a monthly basis,” she says.

Some companies tie compensation to host-country standards.
Another compensation method is the destination-based approach, which calculates remuneration by host-country standards. It ties the expat’s compensation to the local organization, and is often used when a company wants the expatriate to be closely associated with the local operation. Typically, companies will also add housing and other allowances to the employee’s salary. Although it’s easier to administer in many cases, and was designed to save money, individual negotiations can make it very complicated as well as costly.

One of the drawbacks is that currency fluctuations can cause major problems with the host-country approach. When expatriates compare their overseas salary with their home country, for one year they may be happy; another year, unhappy.

Gould says a large number of European companies use the host-country approach because expatriates leaving Europe go to countries where local packages may be greater than a balance-sheet package. To minimize administration, the companies put them on a local package.

The better-of-home-or-host approach is another method beginning to gain popularity. The idea behind this is that no expatriate should have to live at lower than a local level. The Price Waterhouse survey found U.S.-based companies use this approach only 2% of the time, but non-U.S. companies use it 11% of the time. “More companies are struggling to try to make sense of it since they’re handling different nationalities. Every nationality comes from a different perspective about what would motivate them to take an assignment,” says Gould. For example, an American is very open to the concept of tax equalization, which is generally the result of Americans having a lower home-country tax rate and dealing with the high tax rates overseas. But a British expat isn’t as open to tax equalization because in many of the countries, they could be assigned to, taxes are lower than at home. “So every time you deal with a new nationality, you get a new perspective about how they feel about the package,” says Gould.

The international approach tries to create an equitable system among all international employees. It’s especially useful for highly placed executives who will be moving from location to location. Usually, this approach begins with a common point of reference for senior-level management who receive equivalent pay and benefits regardless of country of origin or destination.

Benefits also will be calculated to reflect the special status of these individuals. According to J. Stewart Black, Hal. B. Gregersen and Mark E. Mendenhall in Global Assignments, published by Jossey-Bass, 1992, although international compensation systems should promote equity, they often don’t. “The notion of equity assumes that . . . employees at the same organizational level, performing at virtually the same level of performance, would expect quite similar rewards.” The strict balance-sheet approach may not do that and, consequently, may not contribute to a global viewpoint. Since expats in the same location doing similar jobs but coming from different countries will have different pay (because their compensation is calculated on their home pay), inequity is built-in.

In addition to salary, taxes and benefits, expatriates also receive different allowances as part of their overall compensation. Expatriates receive payment to protect their spending capability; it varies depending upon the employee’s level in the company, the family size and the destination. For example, foreign-service premiums are financial payments to induce employees to relocate. According to Runzheimer International, the international data collection and consultancy firm headquartered in Rochester, Wisconsin, 54% don’t grant such premiums. However, when this type of incentive is paid, it’s usually calculated at about 10% to 15% of base pay, according to ORC’s 1994 survey. One of the problems with a foreign-service premium is that many expatriates believe it’s part of their salary because it’s often included in their paychecks.

Another recent study, conducted by the National Foreign Trade Council (NFTC), a New York City-based not-for-profit organization that facilitates information exchange between major U.S. corporations and monitors trade-related legislation, indicates that some companies, particularly in financial services and consumer products, are moving away from the concept of foreign-service premiums toward what’s called mobility allowances.

“In truth,” says Sheridan, “the assignee might get about the same number of dollars, but the monies are bundled up. Part is given at the beginning and part is given after the assignment’s completion. Under the old foreign-service premium approach, the employee receives money each month, and when the person repatriates and that money is taken away, they have sticker shock because they’ve come to rely on it as a portion of their income.”

The mobility allowance is tied to the actual move. “The economic value may be about $10,000 a year, but instead of getting $800 a month ($30,000 for a three-year assignment), the expatriate gets $15,000 at one clip and the other $15,000 at the end. If they quit while on foreign assignment, they don’t get it,” he says. In some circumstances, the money can also be delivered in a more tax-effective way for the employer. (The Price Waterhouse survey found that 70% provide either a foreign service or mobility premium).

Another type of premium is the hardship allowance. In the past, hardship allowances were paid in addition to the foreign-service premiums. More and more, they’re being phased out except in cases where expatriates face extreme difficulty and poor living conditions. In the Runzheimer survey, about 73% of companies still pay hardship premiums and identify which countries qualify for hardship allowances based on data provided by either State Department recommendations or outside consultants. To figure out the appropriate compensation, many organizations gauge competitive practices by using data providers or networking with other companies in the same industry.

One of the most frequently asked questions is about cost of living. Cost-of-living allowances (COLA) help expats maintain the same standard of living they had in the home country. Companies collect COLA information by tracking typical consumer spending patterns in a “market basket of goods and services” and by calculating prices in the destination countries. The difference between prices in the destination country and those in the expat’s home country are the differential, and if the destination country’s prices are higher, the company awards the expat a COLA. If, however, the differential is negative ( meaning host-country costs are lower), 83% of companies ignore it. Forty-five percent of companies review their allowances semi-annually; 20% review them each pay period.

Since the information is such a fundamental part of the compensation package, it must be up to date and accurate. One of the most important characteristics of a data provider is the frequency with which it reviews and adjusts its calculations, thus protecting against a shrinking of the COLA due to frequently overlooked inflation and exchange-rate fluctuations. Imagine what happened to compensation standards in Mexico after January’s peso devaluation. And with high annual inflation, the potential effects on discretionary spending are huge.

Data providers vary, as do the allowances they advise, and consequently it’s important to find out who collects their data, how frequently it’s updated, if they have information for all the countries you need, and how they calculate their market basket. This last factor is extremely important, and is changing. Because of cost-containment concerns, many companies are creating “efficient shopper indexes,” which calculate COLAs with the assumption that the expatriate will learn the most efficient way to save money.

Housing and taxes constitute the greatest expenditures.
A housing allowance lets expatriates maintain a lifestyle similar to the one they had at home. Although it’s clearly impossible to recreate a U.S. experience abroad, the allowance tries to grant comparable living accommodations. This part of the compensation package, along with taxes, constitutes the greatest expenditure. It’s based on the expatriate’s status as well as the size of the family. According to Runzheimer, for example, a typical dwelling for a family of four in Hong Kong (for an employee making $75,000 U.S. dollars and one making $150,000) may range from $145,000 to $224,000 annually; a dwelling in Geneva may range from $55,000 to $68,000.

Data services, like those mentioned above, select specific neighborhoods international assignees tend to live in and survey different types of housing. The housing tables they create detail the type of accommodation and the price range. Again, the information is only as good as its timeliness. For instance, with the rapid housing inflation costs in Hong Kong, within a few months apartments can go from being affordable to being beyond reach. In fact, there are tales of the throngs of expats in Hong Kong who created a virtual exodus from one neighborhood to another because they had to find less expensive housing when their leases expired. Housing inflation had risen sharply during their residence.

Companies differ in policies regarding employee contributions to housing. Almost 60% of companies use outside-party data sources to help fix appropriate contributions. Those who do charge a housing contribution determine it by finding the differential between the United States and the host country, then decide the allowance’s size. Whether the lease is kept in the company’s or the expat’s name is determined by location and by the tax treatment.

Taxes are a major company expense. And they’re complex, making tax professionals crucial in this area. Because taxes take such a bite, thoughtful tax planning will likely save the company money. The United States taxes all its citizens, whether they make the money in or live in the United States or abroad. This practice sets up a situation for double taxation—in the host country as well as the home country. Plus, not only the base salary is taxable; the allowances and many benefits can be taxed as well. When you consider that tax rates in Japan, for example, exceed 60%, you can see how expensive it becomes.

The two most popular ways to address taxation are through tax protection or tax equalization. Tax protection means the employees pay no more tax than they would if they lived in the United States. The company would reimburse employees for any taxes out of pocket, but would allow them to keep the difference if the taxes were lower. This would actually create a windfall for the employee. Tax equalization means that the expatriate pays no more and no less than if he or she stayed home. In this case, employees pay a hypothetical tax on wages, just as they would if they were home. “Companies moved from using tax protection to tax equalization after realizing that the tax benefit became an invisible part of their compensation package,” says Marcia Marsh, partner in international assignment services practice for Price Waterhouse. “Tax equalization neutralizes taxes and enhances mobility. Also, as companies became more cost conscious, they realized that [tax protection] provided an unintended compensation benefit. When you neutralize taxes, it’s a more palatable way to reduce the overall cost of the package.”

Adds Gould: “A second reason companies have switched to tax equalization is tax compliance. Under tax equalization, the actual tax payments aren’t important to the expat since they’re funded by the company. As a result, there’s no incentive to under- or over-report compensation. Under tax protection, however, any tax savings accrue to the employee, and as a result, they’ll spend a much larger portion of their time trying to reduce their actual tax bill.”

The ORC survey reports that 92% of all U.S. organizations use tax equalization. In the vast majority of cases companies administer their employees’ tax responsibilities. In other words, firms make sure their employees comply with international taxation requirements.

Educational expenses must also be considered. Quality education is many expatriate parents’ first worry. Companies almost always reimburse employees for educational expenses for children in elementary and secondary school—typically covering tuition, books and miscellaneous fees for private, international schools. When students need boarding school, firms provide for such allowances. Expatriates who have college-age students frequently receive airline tickets so their children may visit.

Companies usually also provide some type of transportation allowance. It ranges from a company car and driver to a lump-sum allowance for transportation. An annual trip home is usually guaranteed, with firms paying for round-trip coach for the entire family.

Other remuneration allowances cover relocation expenses, such as managing property, moving household goods and storing furniture at home, helping to find living arrangements in the destination, cross-cultural counseling, and paying for a familiarization trip before the assignment. The latter often includes help with finding schools for the children. Transportation, furniture and other miscellaneous expenses are often covered by allowances as well.

As far as employee benefits go, typically, employees retain the benefits they had at home. However, like other aspects of the package, careful consideration helps to keep the package sensible. This is often tricky, especially in the areas of retirement, stock options and medical coverage.

Pay attention to cost control in developing policies.
Parker sees a return to centralized policy development. “Ten years ago there was a trend toward decentralizing both policy and administration, giving more to the individual business sectors,” he says. Problem was, Parker adds, everything was strictly bottomline driven, so units could do only what they could afford, which resulted in people within the same company receiving vastly different packages. “Today, we’re going back to being more strategically centralized, especially for policy development. This has brought back a little bit more management control and efficiency, and when the process is centralized, it can be benchmarked to the industry.”

In addition to a more consistent application and fairer treatment of employees, a centralized policy can help contain costs. “Instead of a company buying data from three different providers who give varying data, you coordinate with one and create a more efficient framework,” says Parker.

Centralizing policies further helps cut costs because international HR practitioners can look at their compensation packages in a companywide context. “Instead of looking at each package’s individual components, look at the whole package in light of tax concessions and the high cost of living in certain countries,” he says.

Another trend is that global HR conducts more administration and general relocation management. But, in order to do this, HR professionals have to understand the complex world of international compensation. “If you’re the international HR manager, and you’re responsible for all divisions and subsidiaries and locations outside the U.S., it’s impossible to know everything. You have to know about tax, how it’s different around the world, and the special tax reliefs that have been provided for expats in some countries,” says Parker.

Besides taxes, global HR managers also need to administer housing costs. In the past, says Gould, if someone was renting at a loss, the company would reimburse them for that loss. Now, many of the companies she works with use cash-flow analysis to see if there’s an overall loss. The other issue is the housing differential. “Companies now give their expatriates a budget figure, but pay the actual amount,” says Gould. In the past, the employee realized the savings.

Indeed, as the focus shifts from begging employees to accept an international assignment to seeing it as a business, career and personal opportunity, more organizations will seek ways to both expand and compensate their international assignees equitably. Balancing all the elements is no easy task. But the effort will ensure that the company achieves its business objectives abroad.

When Personnel Journal started our Going Global series in October 1993, we set out to discover how human resources professionals in American companies approach the issue of expatriates. We looked at: transplanting corporate culture, selecting expatriates, making an international move, handling cultural and ethnic diversity, managing performance and repatriation planning. Readers gave us positive feedback. We’ve received letters and requests for reprints of the entire series when we’ve met HR professionals in person. It’s clear that we’ve just scratched the surface of the issue—that international HR is a growing area requiring ongoing attention.

Laura Bozich accomplished a formidable task. As the regional director of Central Europe for Chicago-based Tellabs, Inc., a designer and manufacturer of telecommunications products, Bozich was sent to Munich to open a German branch in 1994. Her primary job? To impart Tellabs’ corporate culture before handing the office over to host-country nationals.

Tellabs’ culture is very informal and flexible—everyone calls each other by their first names; they share information widely; and employees have direct access to senior management. In an industry that changes in the blink of an eye, Tellabs operates on the premise that all employees have a stake in the outcome of the business. Tellabs’ global policy reflects the conviction that host-country nationals know the marketplace as well as the business, so most international operations are headed by locals.

Bozich had her work cut out for her. She not only had the difficult task of enticing top-notch Germans to work for a start-up operation—especially tough because American companies are viewed as having a hire-and-fire mentality—but she also faced a society whose cultural values seemed completely contrary to the corporate culture she needed to create.

Multinationals want to promote local managers.
As global companies such as Tellabs expand beyond their national borders, companies will increasingly continue to recruit and groom the talent available all over the world. On the one hand, multinationals may send expatriates to manage for many years and then transfer control to local employees (and with specific projects, such as oil exploration, expatriates may always remain in charge). On the other hand, global companies will find talent anywhere around the world and rotate employees based on expertise, not geography, and use local talent immediately.

Indeed, the number of foreign workers employed by U.S. companies has been on the rise. American companies employ 5.4 million people abroad and investment by American firms in overseas operations was at $716.2 billion in 1993, according to The New York Times. International companies of all sizes are dealing with the question of host-country nationals. Interestingly, a recent study by Drake Beam Morin Inc. and International Business magazine of 1,200 U.S. multinational companies with annual sales of $1 billion or less, revealed that 60% of mid-size firms hire primarily local nationals, 23% hire a mix of local nationals and Americans, and 17% hire primarily U.S. expatriates.

With this increasing recognition of the importance of the world-wide labor pool, what are the implications for American businesses? What are the issues HR managers—and expatriate managers—need to know? How is managing host-country nationals different? What are the challenges associated with recruitment, training and retention? What are the legal and immigration implications? What compensation and benefits questions arise?

“The whole question of how do you manage—how do you plan and staff; how do you organize, how do you lead—all these management activities have a strong cultural component that enters into the equation,” says Stephen H. Rhinesmith, author of A Manager’s Guide to Globalization [published by the American Society of Training and Development (ASTD] and Irwin Professional Publishing, 1993). “There are major differences in perception. For example, Americans tend to be egalitarian and look for empowerment and delegation, people taking personal initiative and responsibility. However, in places like Asia, Latin America, and the Middle East, workers look up to authority figures and expect the authority to make decisions. They’ve been taught it’s their responsibility to be part of a group and respect authority. So there’s a whole set of management activities that one has to deal with in learning to manage a joint venture abroad. And it varies by country, depending on what the cultural issues are,” Rhinesmith says. Overlay cultural conditions and interweave that with corporate culture and the business agenda, and you have a maze of international HR issues as you approach host-country employees.

Tellabs, believes that localizing its global facilities is crucial in several ways. Not only are local nationals more in-tune with the quickly changing market, but Tellabs’ management views it as essential to recruiting talent. Tellabs is a medium-size company that started overseas operations six years ago when it bought a company in Ireland. This year, about 800 of its 2,500 employees live outside the United States, and most of them aren’t U.S. citizens. Their philosophy is to localize the operation as quickly as possible, but only after management is assured that the company culture has permeated the new location.

It’s never very easy. In fact, success of the German company’s operations is the result of lessons learned from the Irish facility, which didn’t get closely tied into the corporate culture. “There was no cross-pollinization of resources—of the Irish coming to the States and learning our culture and no one going to Ireland to learn their culture,” says James Coppens, Tellabs’ manager of international HR. So when an American executive went to Ireland, the Irish would appear to agree with his suggested changes, but when it came down to implementing them, they didn’t always proceed in the anticipated manner. “It seemed to be its own separate company. The impact on business in this type of situation can take a while to correct,” he says. The corporate headquarters, therefore, believed it would benefit business to approach another acquisition differently.

With that goal in mind, Tellabs spent $70 million to acquire Helsinki-based Martis Oy, in 1993. It employs 230 Finns. “When we acquired Martis Oy, we wanted to maintain the entrepreneurial spirit that made it successful, but also tie employees into the corporation so they weren’t out there by themselves,” says Coppens. “We sent the vice president of Europe, the Middle East and Africa to tie into the corporate culture as well as provide leadership and direction and also (serve as) the link back to headquarters. We also sent a marketing manager who had started in the Irish operations. Everyone else were local nationals.”

Tellabs issued company stock to local nationals as another way to get them to buy-in to the corporate facility. They also sent many of the Finnish engineers to the States—and to the Irish plant—to learn to interface with the other employees.

“Our problems with cross-cultural sensitivity became apparent when our corporate people went overseas,” says Coppens. For example, midway through one sales presentation in the Netherlands, an American marketing representative addressed the company president by his first name and asked him what he thought. Even though the American was met with stonefaced silence, he didn’t realize the major faux pas until he lost the sale and several local salespeople informed him that it’s rude to call company presidents by their first names.

This led Coppens and others to institute cross-cultural counseling throughout the organization, with particular emphasis on Finland. All executives—vice presidents, directors and managers—and anyone else who might interface with the Finnish people were given cultural training. Learning from previous experience, the employees in the Irish facility were included.

The executives examined the basic cultural differences between Americans, Finns and Irish, and identified the differences that would play into the business arena. “We focused on how to conduct business meetings, the components of the supervisory relationship, how to communicate effectively,” says Coppens.

For example, they learned that employees in Finland prefer written communication to face-to-face interaction. Consequently, everything is sent by letter or by fax. In interactions, the Finns tend to be more reserved than Americans. Managers, therefore, had to realize they would have to overcome communication barriers because they weren’t dealing with highly expressive Americans. Were managers unaware of this cultural difference, it would impair their ability to judge situations and read their employees. But when you realize you want to approach people differently and need to establish a relationship first to get past the cultural barriers, it enhances the work situation.

Learning the cultural differences while infusing corporate culture is paying off. Tellabs has doubled sales at the Martis Oy facility. Building on that success, the company headed into Germany.

Culture and government affect recruitment, performance evaluation and training.
Tellabs’ success in Germany attests not only to the company’s ability to be sensitive to cultural differences, but to adapt when necessary. Although Bozich’s casual style and determination to create a flexible team environment is working, she also had to change recruitment techniques. For one thing, Coppens and Bozich knew it was critical for the local facility to be headed by a host-country national as soon as possible—and that the transfer of leadership be promoted when recruiting. It sends a message that Tellabs will promote local people to their highest positions. This is extremely important since local talent wants to know it can reach the top.

“It took seven months to hire a sales manager,” says Bozich, who found the candidate through a search firm. The German she hired had worked for another American company for eight years and already was attuned to the atmosphere and culture of an American firm. “It’s incredibly difficult to attract Germans to an American company, particularly because they don’t think they’ll get the top positions. That’s how we sell this job. They know they’ll get my job in a few years. We have evidence of that throughout Europe because all of the offices are run by local people.”

Moreover, when Bozich talked with recruits and new hires, she had to be much more flexible and specific about benefits than she’d ever been before. For example, most German firms offer 25 to 30 days off for vacation. Tellabs initially offered 15 vacation days, which is Germany’s legal requirement. But now, the company offers 25, plus one more day each year. When she did performance evaluations, she had to write down in detail what would happen every step of the way. What if a new product wasn’t introduced? What if the company didn’t make the amount of money it projected? Because German companies offer great security, she was asked extremely detailed questions. Sometimes they were about disability insurance, travel insurance, pension plans or other issues that hadn’t occurred to her before. “I was impressed,” she says. “I’ve been with this company eight years, and never considered many of these questions myself. But because companies are very paternalistic in Germany, we had to provide much of the same (benefits).”

Cultural differences aren’t the only factors in the labyrinth of human resources issues that multinational companies face. Often, even straightforward tasks such as training are complicated by legal and immigration tangles.

Global HR issues aren’t exclusive to American companies.
Multinationals around the world face similar global challenges. ANZ Bank (Australia and New Zealand Banking Group Ltd.), headquartered in Melbourne, Australia, is one example. With $100 billion in assets, ANZ employs 40,000 people in 41 countries around the globe, predominantly in the Asian Pacific basin. With a strong base of 28,000 employees in Australia and New Zealand, the bank has only about 500 to 600 expatriates. The rest of their employees are local nationals, with large numbers in India and the Arab world as well as in money centers such as Singapore, Hong Kong, Malaysia, Tokyo and Taiwan.

“When you’re talking about Tokyo and Hong Kong, the whole idea of managing local nationals is going to be different than if you have greenfield [start-up] operations in Vietnam or China,” says Arie Veenman, chief manager of succession planning.

In the latter instances, where unemployment is high and foreign firms are seen as employment opportunities, concerns center around the basic educational level of the local people, knowledge of English [which ANZ Bank uses as a minimal requirement for employment since it’s the company language], training and the more troublesome matters of local industrial relations and specific government controls.

Case in point. ANZ needed 28 people to open its Vietnam facility. Although senior management positions were going to be filled by expatriates, they needed locals to fill clerical and top supervisory positions. The main criteria wasn’t to find people with financial services experience since they didn’t exist; the main concern was to hire those with English-language ability so they could be trained. The company tested about 400 people during a three-hour language exam at a local university.

Once selected, three Australian trainers took about three months to teach the Vietnamese employees about credit analysis, money transfers and general financial responsibilities. These financial experts were already briefed in Vietnamese culture at one of Melbourne’s leading universities, which draws on its large Asian faculty to help prepare up-and-coming expatriate managers.

With this fundamental background, the Vietnamese were able to open the doors. “Fortunately, there isn’t an onslaught at the beginning, so you get a bit of time to do the processing and continually take stock and upgrade the skill sets of your staff,” says Veenman. It’s been in operation for 12 months, and the bank is just starting to make a profit.

But Veenman had more to worry about than just making a profit. As part of the agreement for getting the license, he had to guarantee the government of Vietnam that the same number of Vietnamese would come to Australia to be trained about Australian banking techniques.

“In countries like Vietnam and China, people are very keen to work for foreign national companies. The difficulty isn’t getting people to come work, the difficulty is with the government relations, the language skills and standards of education. You’ve got to support the employees with a lot of training,” he says.

Increasingly, U.S. and other global companies are exporting their management development and training systems, according to J. Stewart Black, associate professor of international management at Thunderbird, The American Graduate School of International Management in Glendale, Arizona. In other words, they are offering educational courses abroad that used to be offered only on home ground. They are making strong commitments to training opportunities—in technology, management techniques, culture—either alone or in cooperation with universities and colleges. “Traditionally, they haven’t offered these types of opportunities before,” Black says.

ANZ is attempting to train and develop local people, and then transfer them across borders as needed. But the company is encountering government controls on both sides. “Part of our development plan had been hindered by immigration controls,” says Black. “We had a real breakthrough when we recently reached an agreement with the Australian immigration authorities to bring employees from other countries into Australia. Now we can bring 180 people—middle management—into the corporate center and then turn them out again back into different countries.”

It works both ways, though. “Initially, most countries don’t mind if you have a large contingent of expatriates. But, with experience, host countries want their companies to be managed by local people. They want progression for their own staff,” Black says.

This is happening more and more often. Recently, ANZ encountered this in Taiwan. Three years ago, it was almost an automatic rite of entry to bring in expatriates to manage; but today, the company has to show need of high educational qualifications, language criteria, indications that very senior-level responsibility is needed. The country is making sure that there’s fair and equitable progression opportunities for its people. Beyond that, says Veenman, you have to get approval from local central banks. They have to concur that there aren’t local nationals who could take the position. How do companies learn to navigate the tangle? Veenman, Rhinesmith and others suggest cultural interpreters. “If you’re operating in the business environment, you develop cultural mentors from your business contacts,” explains Veenman. These mentors are individuals who are host-country nationals who can explain the host culture to the newcomer, whether that’s an expatriate or an individual considering new operations in the country. These interpreters know enough about the host culture and expat’s culture to explain why things occur and where the individual may encounter surprises or difficulties. “We relied fairly heavily on individuals to understand all the complexities. It’s important to do your homework; to do as much preparation and learning about the government agencies as you can.”

Compensation and benefits is a maze unto itself.
Any time you’re moving somebody from one country to another, or when you have local regulations to consider, it’s ten times more complex than moving somebody domestically, according to Coppens. There are tax structures on each side, government programs of social benefits, hospitalization, unemployment insurance, retirement accounts and innumerable agreements between countries.

Normally, U.S. expatriates are maintained as if they are still in America, and in addition, they’re given other perks to be sure they’re not disadvantaged because of housing and cost-of-living differences. “By definition, the compensation package will be very different for local nationals in the same location,” explains Doug Morris, international consultant with Chicago-based Hewitt Associates. “We need to realize that there are more ways of doing things than just the U.S. way,” he says. For example, in Singapore, people receive 13 months pay rather than 12. In addition, cultural differences affect compensation. In the United States, individuals are paid based on performance directly related to their own activities. In Asian and many South American countries that are group oriented, to pay an individual for superior performance could actually embarrass an individual and demotivate people.

“The best result is to design compensation packages to recognize cultural differences,” he says. “You might develop an incentive plan based on the performance of the group rather than the individual.”

Clearly, you can’t go it alone. Consulting firms, as well as industry associations, are good initial sources of information about taxes, immigration, compensation and benefits package development. In the international arena, compensation and benefits can be more intricate than for domestic employees. There are medical benefits to consider, for example. When Americans travel outside the United States, they have to have the continued support of their U.S. medical benefits. When you’re handling employees from other countries, that’s not always the case. For example, the United Kingdom and Finland have a reciprocal health care agreement because they both have socialized medicine. This means that when people from either country travel, they use the health care facilities of the host country. Companies don’t have to provide additional benefits for foreign employees when their host governments already cover them. But, many countries don’t have reciprocal agreements. Human resources professionals who send expats across borders need be aware of these innumerable options.

The situation can be even further complicated by the local medical coverage. Mexico has socialized medicine, for example. It’s considered fairly good although it may take two to three days to see a doctor. “We can’t have our people who are traveling all over to customers in South America be out of our offices for two days if they need to get treated for a cold,” says Coppens.” We need them to be more productive than that.” So Tellabs issues supplemental medical coverage that allows its employees to visit private medical-care providers. “It’s more expensive,” he says, “but it keeps the business moving.”

Some companies use their benefits to enhance retention. San Francisco-based Bechtel Corporation is one of them. Bechtel has been operating in the international arena for more than 80 years. Philip Hidalgo, a human resources supervisor for the Latin America Organization, sees retention as one of the emerging problems when addressing the issue of local staff. “There is a tendency of the expatriate employer to essentially throw money at the problem,” he says. “But, it’s not just a case of paying the highest salary and blowing the market out-of-whack. You need to look at some of the benefits programs.”

Salaries in Hong Kong are skyrocketing, for example. The region’s turnover rate has been tremendously high. But according to Thomas K. Fuegner, human resources manager, project operations, Bechtel has been relatively successful managing through that. One reason? A company-adopted retirement plan for local nationals. This is especially appealing because Hong Kong doesn’t have mandated retirement funds.

Furthermore, the company has developed a dental plan for Hong Kong. Another example of innovative benefits: Bechtel put together profit sharing for its local nationals in Thailand (a country that only recently started its social security program).

“I think you need to be a more sophisticated, more market-oriented, more innovative employer so you foster some of these other allegiances that are important to retaining a long-term work force,” says Hidalgo. “You need to put together a good package and not just overpay the market.”

Bechtel has recently restructured its organization to establish four regional centers to use local talent and execute work more efficiently. These centers are located in North America, Latin America, the Asian Pacific and a group referred to as EAMS—Europe, Africa, Middle East and Southwest Asia. In the Asian Pacific, for example, the company has 470 employees, about 250 of whom are local nationals; 250 national staff in Latin America; almost 1,300 in EAMS. In addition, the company has joint stock companies in Indonesia and Taiwan with limited expatriate management. These organizations will become independent operating units as quickly as possible.

“About 20 years ago, Bechtel was an American company that worked overseas. Now, we’re developing more of a global perspective; we’re moving toward a commitment to establish ourselves as regional companies and get even more local,” says Fuegner. “The motivation is two-fold. One is cost-driven. The other is that it just makes good business sense; there are talented labor pools in the regions who are familiar with the markets and business customers.”

Companies who try to retain their staff with old techniques might be unsuccessful, anyway. For example, in countries that tend to have periods of hyperinflation, such as Argentina and Brazil, compensation and retirement savings plans lose their value, and therefore, these types of benefits have to be structured differently.

Finally, Bechtel has also instituted a year-end bonus program to a large segment of its worldwide staff. An executive communication goes out to all Bechtel employees. “Whether it’s one of our Thai nationals, one of our Chilean nationals or one of our employees working in our Houston office, they all get the same letter, and to varying degrees get a bonus check,” says Fuegner. “We recognize all of our employees as contributing to the success of the company and regardless of individual performance, if the company has done well, there’s the opportunity to share in the rewards.”

Managing people from countries other than the United States presents continual questions and complicated situations. Cultural, political and legal factors come into play as well as social problems prevalent in the country. International HR professionals who support their company’s global business objectives face more questions than ever before: How do you supervise people? Do you do it on an individual or group basis? What are the implications for a hierarchical society when your organization flattens and eliminates titles like vice president and director? When do you need to call in cross-cultural counselors and cultural interpreters? What kind of legal, tax and compensation advice do you need?

Everyone is looking for answers. As Rhinesmith puts it, “Globalization has arrived in the world, but not in most of the world’s organizations.” As he says, although conventional wisdom focuses on our inadequate spending in technology and equipment as fundamental restraints to our effective competition, there’s evidence that the real problem, “… may lie in the lack of global mindsets in key managers.”

Black, co-author of Global Assignments: Successfully Expatriating and Repatriating International Managers (Jossey Bass, 1992) puts it this way, “You still have to have certain business results. The key is to make sure that you don’t insist on the same means to the same result. If a different approach will get it done in a different country, that’s the way to go. You have to care about the results more than the method.”

The caveat: HR practitioners have to understand effective approaches and allow the host-country nationals to use them.

Nina and David Cissell are the lucky ones. For 2 1/2 years, David was business director for the chemical division in Brussels for Monsanto Corporation—a company that takes international human resources planning seriously. Consequently, when the Cissells returned to St. Louis, they were among the first participants in Monsanto’s repatriation program.

They attended a repatriation training program in which they learned what they should expect upon re-entry. They were warned about the culture shock of returning home, about how colleagues and friends might be different, about how the office environment might have altered, about how much the expatriate experience had changed them and their three children.

Monsanto’s program included an opportunity for the Cissells to showcase their new knowledge in a debriefing session. Cissell invited five people to a meeting and shared with them what it was like to have lived abroad—personally and professionally—and what it was like to return home. Nevertheless, he and his family admit there were times when they still felt as if they were in a timewarp. They returned to familiar surroundings in the United States, but they were quite changed.

Luckily, the Cissells were surrounded by people who took an interest and maintained it as the expats transitioned back into American life. Cissell was promoted to the position of director of finance for the Latin America World area. The vast majority of re-entering expatriates don’t experience similar HR planning and repatriation programs to help them.

“Repatriation has been the classic step-child in international HR management,” says Nancy Adler, professor of organizational behavior and cross-cultural management at McGill University, a noted researcher and author of articles and books, including most recently: Competitive Frontiers: Women Managers in a Global Economy (Blackwell Publishers, 1994) and Strategic Human Resource Management: A Global Perspective, (published in Human Resource Management in International Comparison, deGruyter, 1990).

If any aspect of globalization points out the complexities of international assignments as well as the systemic weakness and lack of planning within the international HR function, it’s repatriation. Repatriation is usually overlooked instead of being seen as the final link in an integrated, circular process that connects good selection, cross-cultural preparation, global career management and completion of the international business objective. Indeed, instead of employees coming home to share their global knowledge with others and encourage additional high performers to go the same route, expatriates face an entirely different scenario.

Often when they return home after a stint abroad (during which time they have typically been autonomous, well-compensated and celebrated as a big fish in a little pond), they face an organization that doesn’t know what they’ve done for the past several years, doesn’t know how to use their new knowledge and, worse yet, doesn’t care. In the worst cases, re-entering employees have to scrounge for jobs, or companies will create stand-by positions which don’t use the expat’s skills and capabilities and fail to maximize the business investment the company has made. The situation often is exacerbated by downsized and restructured organizations.

Furthermore, the expat has changed dramatically and wants to share his or her experiences. Usually few people are interested. Add to this unrealistic expectations by the expats, their having lost touch with the domestic office’s technological and personnel changes, and the enormous family upheaval, and you begin to have an idea of the tremendous challenges awaiting individuals as they re-enter the United States after assignments abroad.

Statistics bring the situation into bold relief: According to the 1994 Global Relocation Trends Survey Report published in January 1995 by the National Foreign Trade Council and global relocation management specialists Windham International, while 75% of the companies surveyed address repatriation (up from 45%), “repatriation services” can range from simply shipping household goods (97%) to homefinding assistance (55%) to career development (33%). The 110 surveyed companies, which employ collectively more than 24,000 expats, said that given the massive 30% increase in the numbers of expatriates going on international assignment, lack of job guarantee is one of the most critical challenges they face.

In research J. Stewart Black and Mark E. Mendenhall cite in their book, Global Assignments: Successfully Expatriating and Repatriating International Managers (by Black, Hal B. Gregersen and Mendenhall, published by Jossey-Bass, 1992), 60% to 70% of repatriating employees didn’t know what their positions would be before they returned home. Sixty percent said their organizations were vague about repatriation, about their new roles within the company and about their career progression. Moreover, they felt the firms disregarded their difficulties in adjusting back to life in the United States. When American expats found jobs within their companies, 46% had reduced autonomy and authority. And contrary to the reason that many Americans take international assignments—the idea of advancement—only 11% were promoted. Black and Mendenhall found that 77% of Americans actually took jobs at lower levels than their international assignments.

It’s no wonder that 10% of expatriates leave their company within a year after returning home and 14% leave between two and three years, according to the Global Relocation Trends Survey Report. These figures aren’t only unfortunate, they reveal poor HR planning and a dramatic loss of talent for the business that sent these individuals.

“I don’t think people really understand yet that assignments are a process,” says Carol Jones, Monsanto’s human resources specialist in international assignments. “They pick it up in the middle. They don’t think about why they’re sending out the person, what will make that person successful, what they’re expecting. They don’t realize that successful assignments begin with repatriation planning at the time of expatriation.

In other words, rather than looking at the process in fragmented pieces, assignments have a higher chance at success when the practitioners link the elements together from start to finish. According to Adler, you should be able to see how any one part of the process links with others. The elements of the process include: assessment selection, company orientation, cross-cultural training, dual career support, relocation/move assistance, in-country orientation and support, development, re-entry planning and assistance, repatriation and reintegration.

Understanding international assignments as a process, and realizing that planning helps its success, is critical for human resources professionals. “Clearly the caliber of human resources planning that’s done by a company really shows up in the international assignment area,” says Eric Campbell, director of global human resources for Avon Products, Inc. “In a company that does excellent HR planning, these types of situations [poor repatriation] don’t arise as much. Even though individuals may not be high potentials, if they’re considered strong enough for international assignments, the groups that sent them in the first place will be held accountable for their repatriation.”

On the other hand, he says, if you’re a company that doesn’t have an effective HR planning system, these people going on international assignment are essentially taking a leap of faith.

As organizations move into the international arena, human resources staffs will become more adept at recognizing their company’s global expansion objectives and plan international assignments more thoroughly. Only then will HR be able to develop company structures and policies that truly support each aspect of an international assignment. Some firms—large and small—are already doing that.

HR planning is key.
Monsanto’s repatriation program is a model of HR planning. It was created with the idea that all the pieces of the expatriate process work together. The $7.9 billion agricultural, chemical and pharmaceutical company has 30,000 employees with approximately 50 expatriates and 35 international employees working in the United States. International human resources managers get involved in predeparture assessment, cross-cultural counseling, performance management (see October 1994 issue for details) and other administrative aspects of the international assignment.

One of the strongest features of Monsanto’s program is that employees and their sending and receiving managers develop an agreement about their understanding of the assignment and how it fits into the company’s business objectives. The focus is on why they’re sending the assignee to do the job. This not only assures they have the same understanding, but also ensures that they’ve done serious thinking about the global assignment.

John Amato and Carol Jones, responsible for international assignments, developed the company’s repatriation program in the fall of 1992. “We did it because the attrition rate was high,” says Jones. “People felt they went out and were expecting career advancement and utilization of their knowledge. When that didn’t happen, they would feel dissatisfied.”

Now, says Amato, manager of human resources for international assignments, the repatriation piece creates significant movement toward globalization.

“This isn’t touchy-feely stuff,” he says. “We spent a lot of money to send this person out. By saying, ‘Let’s tap into them, let’s give them a chance to tell others what they’ve learned,’ the organization learns, and they feel valued. They know we appreciate their value, and the company sees a return on investment.”

Expatriates who have international experience know the company values their expertise. They meet with cross-cultural trainers during debriefings and showcase their experience with their American peers, subordinates and superiors. “Because folks here know there’s a resource they can tap into, it creates opportunities for that person to infuse knowledge back into the domestic organization,” says Amato. “That gets you back to the employee’s expectations and results in retention. It results in a circle.” For example, he says expectation management is to create a clear understanding on the part of the employee about the kind of job they’re coming home to. Says Amato: “When you say to an employee, ‘we value you and we expect the assignment to develop you. This is a career path move,’ that means one thing.” On the other hand, if supervisors are clear that the move is a project or technology transfer, expectations of the re-entry job is more likely to be in line with the company’s future plans for these employees.

Monsanto’s repatriation program focuses on more than just business—it attends to the family’s re-entry. Sometimes the difficulty with repatriating has more to do with personal adjustment than with work-related matters. But, the personal matters affect the business.

Which is why Monsanto offers repatriating employees a way to work through personal difficulties. Approximately three months after their return, expats like David Cissell meet for about three hours at work with several colleagues of their choice. The debriefing segment is a conversation aided by a facilitator who has an outline to help the expatriate cover all the important aspects of the repatriation. Says Cissell, “It sounds silly, but it’s such a hectic time in the family’s life you don’t have time to sit down and take stock of what’s happening. You’re going through the move, transitioning into a new job, a new house, the children may be going to a new school. This is a kind of oasis,” he says, “a time to talk and to put your feelings on the table. The counselor (who is a consultant) leads you through and helps you understand what you’re experiencing.”

The debriefing segment serves several purposes: to allow the employee to share important experiences, to enlighten managers, colleagues and friends about his or her expertise and to share information so that others within the organization can use some of the global knowledge.

Cissell was moving into his current position. He invited his new boss (Monsanto’s vice president of Latin America) as well as other colleagues and a friend. “It was pretty powerful,” he says. Cissell talked about the business environment and how he saw European culture impacting that. “My boss had not lived internationally, and although he had an appreciation for cultural changes and things that go on as you move people around the world, he said that he had not really thought through some of it.” That conversation really helped open up his eyes.

“We’re trying to get the expatriates to be the shining stars out there to radiate their light,” says Amato. The debriefing helps others who travel overseas and teaches them how to get more knowledge while they’re out there. “In that way, repatriation builds on itself.”

Returning assignees need to know the next step.
One of the most important questions that anyone can ask an expat is, “What is the next assignment going to be?”—the one after the international assignment, says Avon’s Campbell. “The problem is that often the assigning manager doesn’t pay attention to what the person is going to be doing next.”

The issue becomes particularly important during these days of reengineering and downsizing because often the job this person left has been cut as part of cost-reduction maneuvers. Even though organizations have more difficulty planning far ahead, if companies carefully monitored their expats, they could better prepare for their return.

“Everybody blames this process [poor repatriation] on ineffective career pathing and career planning, which companies have a hard time doing because we’re in such a changing environment,” says Michael Schell, president of New York-based Windham International. “We can’t even tell people who are in the U.S. that if they finish a particular assignment, they’ll have a specific job, let alone people who are going on assignment and who will be out of sight.”

It’s too difficult to do. Therefore, what becomes very important is to watch the performance of the person while on assignment. Then, when there are openings they’re qualified for, the employee can be moved into those positions. “That monitoring of career progress doesn’t usually take place effectively when people are on expatriate assignment,” says Schell. “Therefore, we don’t know how well they succeed; how much they fall, or what they can do for us when they come home.”

In this complex system, there’s a strong relationship between a successful assignment, adequate performance management and good repatriation. Effective HR planning that includes accurate performance evaluation (by someone who understands the assignment and its specific limitations) is one of the underlying requirements for a successful assignment and reintegration into the organization. In addition, employees feel they’re being considered and aren’t being forgotten while out of the country.

And, companies don’t have to be large to have successful expatriate programs. Coherent, Inc., a $200 million Santa Clara, California-based company that makes scientific and medical lasers, has an innovative approach to repatriation. The company has 1,500 employees overall and about 400 in the medical division, with sales and service offices in the United Kingdom, France, Germany, Japan and Hong Kong. With only six expatriates and one third-country national (TCN) in the medical division, the department had been handling expatriates on a case-by-case basis until 1994, when they began formalizing their policies.

The company’s inventive programs brings people back to the United States on a short-term project before they’re repatriated. Employees who are ready to come back to the United States return for a couple of months to do projects that they’re very qualified to do. Then, they go back to their host country to wrap things up and then come back full time.

“It allows them to get to know the area, to spend some real time back here instead of just a five-day house-hunting trip, and allows them to get reacquainted with people in the office, the lifestyle and the work style,” she says. They’re even doing it with a third-country national.

Coherent, Inc. factors in one other critical component—maintaining close contact with the expats. “It’s not like they’re gone and forgotten,” says Chan. They come back on a regular basis a couple of times a year as well as for the annual sales meeting. In addition, during quarterly sales meetings, directors talk about these employees. Their work is visible and talked about.

There are two crucial parts underlying their repatriation policy, says Chan. First, “These people are super-duper employees. Their expertise is needed here, so they’re an excellent resource for a project when they’re asked to come back and work here.” Secondly, when they spend time here, their faces become more familiar to the rest of the employees and it makes the transition into their new role easier when they return.”

Chan believes that expatriate assignments are attractive to employees not only because the assignments themselves are good, but because expats know they will be repatriated well. Because excellent employees are sent on international assignment, typically there are jobs awaiting their return.

Coherent, like Monsanto, has strategies in place to make the repatriation process go more smoothly. Furthermore, they only send their best people.

Whether the company is large or small, this is a fundamental contribution to good repatriation. Says Richard P. Randazzo, Asea Brown Boveri, Inc. (ABB’s) senior vice president of human resources of the America’s region, “The first step to successful repatriation is don’t send anybody anyplace that you’re not willing to take back. Ninety-nine percent of the repatriation problem—if you have a problem—is caused by sending somebody someplace that you’re looking to get rid of.”

If they’re good, says Randazzo, the sending organization generally starts to make noise about getting them back even before their global assignment is completed. Wherever that next assignment comes, the knowledge they’ve acquired on their expatriate job is valued. ABB, the $30 billion transnational giant with more than 220,000 employees around the world, designates the sponsoring manager with the responsibility of finding a new position for the international assignee (although it usually falls to the local HR manager). The process starts about six months prior to the conclusion of the expatriate project. First, as the succession-planning process occurs each year, they devote time to talking about expats—who is out, who is coming back and when. In some cases, the individual will send resumes to a select group of HR managers that may have an opportunity for a person with those skills. Or, Randazzo may know of opportunities.

“The rule is that good performers always will find opportunity within the company,” says Randazzo. “If somebody is very good, invariably they’ll come back in good shape.”

Personal difficulties also affect business adjustments.
Even if employees do well in business, some of their trouble readjusting may come from family difficulties. Part of their difficulty in readjusting may be because they’ve been disconnected from domestic headquarters and left out-of-touch. Consequently, they don’t know what to expect upon return.

Intel, the $8 billion-plus computer chip maker located in Santa Clara, California, with almost 30,000 employees, makes a strong effort to keep expats involved in the organization throughout the international assignment. Employees in the company’s sites around the world keep in touch frequently via phone, E-mail and video conferencing. They do this as part of their ongoing work assignment, whether they’re in California or in Europe. In an effort to keep employees and their families informed—and aware of Intel’s business agenda, the company created several books detailing various aspects of the expatriation experience, including information about considering an assignment (for the family as well as employees) and a tool kit for managers regarding selection and preparation. One important component deals with repatriation.

The book details the cycle of re-entry shock and why re-entry may be difficult. It raises questions that people may not think of on their own, such as the letdown that occurs upon return and the life-style/benefits that will change when they go home. It prepares them for feeling alienated and distanced from their friends and colleagues, and addresses the family issues such as children who might have a difficult time fitting in when they go back to school.

“The repatriation piece is probably the most often overlooked part of the assignment,” says Sharon Richards, intercultural training program manager, who created the expatriate books and is instrumental in the company’s training programs. However thorough the repatriation booklets, Intel’s re-entry process begins well before repatriation. “We believe in training because you need to set realistic expectations for the employee and the family. You’re going to have a better shot at success.” Intel had a large number of people on a project in Ireland. Before their return, the company conducted a road show. They gathered people and had a day-long training session about taxes, relocation, shipping goods. Half the day was spent talking about what it would be like to return home.

One key area that Richards believes is often overlooked is the culture shock expats experience during re-entry. To facilitate the adaptation process, it’s critical for expats to know that repatriation is likely to be difficult. “They think, `My friends are there. It shouldn’t be any problem at all.’ In fact, they’re likely to have the initial sense of euphoria they did when they went on assignment, and to enjoy all that they missed when they were gone, but then they will also make comparisons in reverse. They’ve grown and changed, and they go through an adjustment period similar to the one they experienced when they first went on assignment.”

Another important component is putting the assignment into perspective. People are so full with what they want to tell others, that it’s overwhelming. They don’t anticipate that friends and co-workers may not be interested in their adventures, and may in fact be envious when they try to recap them. “We help expats identify two or three key important things they want to communicate with others,” says Richards. “Then, we suggest that they be sensitive to other people. Before launching into a story, ask what has changed in their life and what occurred while the expatriate was gone.”

In order to take advantage of the international experience—and to continue to acknowledge the expat’s knowledge—Richards has repatriated employees participate in predeparture training and culture-specific training whenever possible. Not only do the expats enjoy it, but their words of wisdom help the prospective international assignee.

Job security brings expatriates full circle.
Beyond the crucial personal aspects of repatriation, Richards acknowledges that having a job upon return is probably one of the most important factors to a successful return. At Intel, she says, they’re careful to move people only when they have a specific reason—such as training, a project or a special assignment. Although there are no job guarantees, they make efforts to use the experience of international assignees as much as possible. In addition, because HR planning works in tandem with the business objectives, expats are monitored and performance is managed and appraised.

Indeed, not all organizations today, however, are able to be as sure as they once were about having a job awaiting an employee’s return. “There are so many double-edged swords,” says Noel A. Kreicker, president and founder of International Orientation Resources. International HR is aware and committed to resolving and supporting the repatriation issues as well as creating supportive programs and clarifying policies. However, in many cases, HR’s hands are tied because corporations are still so busy sorting themselves out. Usually, it’s the people who are repatriating who have been forgotten. Not only does HR face the task of helping to prepare and maintain the individual on international assignment, it plays an important role in bringing the employee back to the United States and helping the company to capitalize on its investment. “It’s one of the most difficult realities now,” he says. But no matter how challenging, there are organizations, large and small, that are meeting it. In companies like Monsanto, Intel, Coherent and ABB, people who are selected well, monitored carefully and shown that the company recognizes and values them, feel rewarded, recognized and will continue to make contributions when they return.

Laura Gilbert becomes passionate when she talks about her company as a learning organization: A place she defines as having a proactive, creative approach to the unknown, encouraging individuals to express their feelings, and using intelligence and imagination instead of just skills and authority to find new ways to be competitive and manage work. Because she’s aware of fancy rhetoric around the topic, she’s adamant that being a learning organization isn’t a trend but a way people think about learning, relate to each other and connect to their organization.

As human resources manager at Minnesota Educational Computing Corp. (MECC), she and her colleagues have been thinking about learning-and learning new ways to think-since 1991. Undaunted by the magnitude of the changes they hope will evolve, Gilbert and colleagues try to make the concepts of the learning organization a reality in their company. In the book The Fifth Discipline: The Art & Practice of the Learning Organization, Peter M. Senge explains why: “As the world becomes more interconnected, and business be-comes more complex and dynamic,… organizations that will truly excel in the future will be the organizations that discover how to tap people’s commitment and capacity to learn at all levels in an organization.”

These organizations create corporate structures where “people expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people continually are learning how to learn together.”

MECC’s approach to developing a vision statement illustrates this philosophy. In fall 1993, management came together at the company’s annual retreat. But instead of the CEO developing a mission statement and delivering it unilaterally to be received by everyone passively, senior managers got together and talked about what they wanted the company to look like at the turn-of-the-century. They then imagined themselves in the year 1998 and wrote an article fashioned for The Wall Street Journal. The story illustrated how the company’s “phenomenal success” in 1998 drew its beginnings from the strong foundation it laid in 1993, spelling out the company’s goals and mission.

Because the learning-organization notion involves everyone and the entire system, the managers returned to MECC’s staff of 180 and said, “Here’s the latest to hit the press about MECC. What’s your department going to do to help us attain that vision? Why does your department exist and how do you fit in?”

Each department brainstormed answers to the questions. But, they didn’t leave the answers in notebooks collecting grit on someone’s highest shelf. Instead, every department wrote their visions on huge sheets of paper and taped them on the walls throughout the building. Some were written in script and calligraphy; some had artwork and illustrations; some were orderly with numbers and stats; some were colored and some were plain. Many departments took their messages and posted them in other areas of the company.

The enthusiasm was palpable, and even after a month, nobody wanted to take their messages off the wall. In fact, some of the ideas went directly into marketing campaigns and product development. “This kind of exercise can’t help but affect the sense of connectedness, the sense of working as a whole system and the value that each provides towards a common goal,” Gilbert says.

Exploring the concepts behind the learning organization.
A prevalent notion of the learning organization is as MECC demonstrates: It’s a system in which everything is interrelated; people, production and procedures are part of a whole, each affecting and being affected by the others.

But it’s more than that. Senge, who is the director of the Organizational Learning Center at Massachusetts Institute of Technology’s Sloan School of Management, explains: “Really, when you look at what our work is about, it’s trying to understand some of the core capabilities that might be necessary within organizations for them to thrive in the kind of world we live in today-a world where you can’t predict things very precisely anymore and where you can’t count on what worked in the past to work in the future… Ours is a world of increasing interdependency.”

According to widely recognized pioneer thinkers such as Senge and Russell L. Ackoff, formerly of the Wharton School and chairman of the board at INTERACT, The Institute for Interactive Management in Bala Cynwyd, Pennsylvania, our traditional way of handling complexity prevents us from seeing the larger picture and from acknowledging our own connectedness to it. People have a tendency to break problems down into smaller pieces so that they’re more manageable. However, the difficulty with this reductionist type of thinking is that it assumes that the sum of the parts equals the whole. Furthermore, this approach dooms us to solving problems in the same way we’ve always tried to solve them. And proponents of the learning organization believe that unless we find radically new approaches to solve problems, we’re doomed to failure. “The essence of a learning organization is that people are changing, people are developing ways of thinking and ways of interacting that are fundamentally different than the way most people operate most of the time in most organizations,” Senge says.

The basic question then becomes, “What would be the core capabilities of organizations to be able to thrive in such a world?” Many organizations start with Senge’ ideas about the five disciplines (see “Senge’s Five Disciplines for Learning Organizations”). Eventually they ask, “What other ways could we think? What ways could we work together?”

But each organization has to find its own way. Even Senge acknowledges that the five disciplines are a foundation but don’t actually tell you where to start. To be able to implement many of these ideas, experts say it’s most important to create an environment in which people can learn.

Senge cites three key elements:

1. You need real commitment and a compelling business argument as to why it’s vital to change. (In other words, people need to acknowledge that they’re stuck. They need to be willing to direct a lot of energy and commitment toward something different.)
2. You need to have a domain in which to take action. Even if 10 people agree on a plan, it’s pointless if they don’t have a place in which they can take action. You didn’t learn to walk by sitting around and contemplating it. Learning involves the willingness to experiment. A domain allows you to practice some of the ideas so that learning can become part of an ongoing process. The whole idea of learning laboratories is to create managerial practice fields where people come together and practice as well as devise new products and services. This is much like a sports team or a theater troupe rehearsing. Learning always involves taking action.
3. You need tools and methods so that you can put the ideas into practice. According to theorists, this element poses a big problem in trying to bring about innovation in the United States because there are very few tools we develop. “It’s sobering to realize how long it takes new theories to get translated into practical tools,” Senge says. One example of a tool is Toyota’s philosophical commitment to quality management. When the company shifted the infrastructure of the factory so that people in the front lines were given methods to gauge quality, tools to conduct experiments and authority to stop the assembly line, the methods were made available to support the commitment and philosophy.

Finally, most theorists and practitioners in this field agree on three components: the change in mindset that’s necessary for management to undergo; a creative orientation that encourages individuals to be proactive rather than reactive to situations; and an orientation toward systems thinking.

A learning organization is a philosophy, not a program.
Because it’s merely a concept, how do you translate the learning organization into everyday corporate life? How are companies working with the philosophy to implement change? And what role does human resources play in such an organization?

For most HR professionals, the very idea of considering learning as something separate from a training program is asking for a fundamental mindshift. But human resources isn’t alone. This mindshift is a cornerstone of the whole idea, and is required by everyone.

For this reason, learning organizations don’t just happen. In fact, many of the thinkers, researchers and practitioners say a company never becomes a learning organization because by definition it means always evolving, always being in flux, always learning. In addition, there are a variety of approaches that can be applied; there’s a new, basic vocabulary to learn, with phrases such as learning laboratories and dialoguing; and no pat answers. And, it involves breaking down barriers in the ideas and assumptions-or mental models-we already possess, and in the way we talk to each other.

The learning organization is so radical that many human resources people (as well as others) feel uncomfortable with it. They say it’s too soft; too amorphous. Some learning-organization advocates even worry that if the human resources staff gets involved in implementing the concept that they may attempt to turn it into a program, nullifying its benefits.

“It’s hard for people to think differently about integrating new knowledge,” says Susan Schilling, vice president of development and creative director at MECC. “It’s a challenge to look differently at your customer, at your distribution and production methods, at the way you think about developing product.” But, the organizations that can generate and quickly understand new information and effectively communicate it to the staff are going to have a competitive advantage, she says. “We have to keep raising the bar and improving the quality of our work and the timeliness of our decisions.”

Given a chance, the learning-organization concept is powerful. It allows for greater productivity, efficiency and idea generation. “It smells like, looks like, and often feels like soft stuff, but when you cut through that and get to the core, it provides very solid, measurable and definable tools and processes that result in real live business results,” says Ron Hutchinson, vice president of customer service for Milwaukee-based Harley-Davidson Motor Company Inc. Indeed, if you do it right you can save millions of dollars.

Take, for example, Deerborn, Michigan-based Ford Motor Co. “Because of behavioral changes that we attribute to the learning-organization concept, our team was more effective, which resulted in more upfront problem resolution,” says Nick Zeniuk, business planning manager in Ford’s Lincoln Continental Car Program.

“As a result, we’ll be able to save $50 to $65 million that we would have spent correcting late designs or rebuilding production tools,” says Zeniuk.

Business people such as Zeniuk believe in the learning-organization concept not just because it’s the latest buzz word, but because they’re discovering that its principles can make a difference in their work.

Ford Motor Co. is a place where systemic thinking works.
Ford has been exploring the idea of organizational learning since the late 1980s. It’s a place where systems thinking, collaborative learning and action learning come together. “There’s a fundamental shift underway in the practice of management, and much of that is contained in the notion of systemic thinking and collaborative learning,” says Victor Leo, Ford’s liaison officer to MIT’s Organizational Learning Center and program manager at Ford’s Executive Development Center. “What’s coming to the forefront is the ability to connect business functions, such as marketing, finance, product development and various staff-support activities, to see how they’re interrelated and interdependent. It’s causing a real shift in the way the values of the corporation are espoused and carried out.”

The learning-organization philosophy began at a senior executive program in 1988 when management said it wanted to learn about thinking and how to think differently. Leo and his associates researched several of the top resources on systems thinking and collaborative learning. Within two years, 2,000 senior executives had gone through a week-long learning program that exposed them to the concepts, gave them a safe place to dialogue and opened their minds to the ideas. They accepted the concept as reasonable, but questioned how one would translate concepts into the workaday world. “We picked up the gauntlet and focused on moving from the concept to application,” Leo says. He and a few other colleagues formed relationships with Senge, Ackoff and others, attended workshops and did a lot of reading. Then they looked for individuals who would begin work on applying the ideas.

Systemic thinking and collaborative learning didn’t happen overnight. It required internalization of ideas and transformational change-and that required time. You can’t move from machine age, or analytical thinking and individual performance, to a more systemic, collaborative view easily. You need an infrastructure where you can apply the theory, and an arena where you can practice the strategy and move away from fragmentation. In other words, you need to rehearse seeing the world (or the business) as a whole. As Leo puts it: “We constantly remind ourselves that the customer drives the whole vehicle. No one goes out and says, ‘I bought this car because it had the best brakes.’ ” But it isn’t easy to shift to that kind of holistic thinking.

Ford found several proponents who were willing to help create an arena for experimentation. One of the leading champions in the company is Zeniuk. He became interested because he believed the company could improve its product-development process. “We were managing in a stressful environment. We weren’t able to get people to work effectively together until we entered into a crisis mode. We could produce excellent results, but the methods used weren’t compatible with what I call learning.”

Zeniuk wanted to enable more effective upfront product development to ensure the launch of a new Lincoln Continental. “When a company’s style is crisis management, it tends to focus people’s energies around a goal and eliminates distractions. When they’re in crisis mode, people begin to understand their interrelationships and interdependencies and are able to produce incredible results. Crisis management does work, but we don’t learn anything from the experience. And the future demands learning. If we can’t learn, somebody else will pass us by.”

Zeniuk began reading about the learning organization. In 1991, he met Peter Senge and, along with colleague Fred Simon, program manager, began working with the Organizational Learning Center. The center acted as a facilitator rather than a consultant, and insisted that Ford discover its own solutions-outsiders couldn’t impose them.

Zeniuk and Simon rolled up their sleeves and with a small group (eight senior managers) worked two days at a time offsite every month for approximately eight months. They began to create situations (what they call learning labs) in which they could talk to each other about their current reality. They developed a vision of where they wanted to be and engaged the whole team in developing prescriptions for getting there. “It took us approximately eight months for the bosses to learn how to quit being bosses,” says Zeniuk. “Before we could engage a team and incorporate some of the new learning, we had to eliminate the conflict that naturally existed because we thought we already had the answers. We also had to eliminate the inability to listen to each other.”

MIT’s Organizational Learning Center introduced the group to a slew of techniques for breaking through those communication barriers and dialoguing with each other. The tools help individuals become conscious of their assumptions. These assumptions get in the way of communicating effectively because unconscious thinking colors the way we talk and the way that we see things.

Some of the tools the group used were left-hand/right-hand conversation (the problems that occur with unspoken messages), ladder of inference (a technique that helps to specify our assumptions behind our thinking through common understanding), balancing advocacy inquiry (the dual responsibility between espousing our own position and understanding the other person’s position to create a situation both people can support), creative tension (a vision-driven action) and the system archetypes (diagramming techniques that reflect recurring system behavior and develop an understanding of the most effective place to take action). They also began practicing techniques that forced them to face a lack of trust with each other, the inability to make decisions and the bias toward authoritarian management.

They discovered through the tools that these counterproductive behaviors were rooted in mistrust, fear and control. “When we began to realize this, we began to treat each other very differently. We learned to listen to each other. We got to do some serious dialoguing, which means talking to each other and not worrying about winning or losing,” says Zeniuk.

After an intense eight months, they finally could ask each other what they thought-and began to feel truly comfortable to say what was really on their minds. Now that there was an effective learning team of bosses, the company designed a two-day learning lab for the rest of the people in the Lincoln Continental Car Program and trained them in groups of 25. Approximately 200 people now have experienced the learning lab, where cross-functional members of a team practiced using some of the tools to solve their day-today issues. According to Zeniuk, they came in with problems they couldn’t resolve and walked out with new insight about how to resolve the issues.

One of the techniques the groups used is an aid to thinking systemically called Shifting the Burden. Here’s an example of how it works. A group of development engineers were trying to lessen the noise, vibration and harshness (NVH) of a vehicle. They added reinforcements to help cut down the noise, but these added weight that increased forces on the braking system and the tires, which meant that those systems had to be redesigned. Upgrading the braking system increased the cost.

Essentially what happened was that the development engineers created a solution by shifting the burden to another group. “In the past, when one group acted to solve their issue, it usually caused a problem in another group. The resolution of these issues would be by whoever screamed the loudest, had the most clout or went to the boss the fastest.” Using this technique to see how people ordinarily handled these situations, they saw that shifting the burden wasn’t really helping the problem. They began to look at the systemic interrelationship because everyone wanted the car to be quieter. Everyone agreed they needed to resolve the problem and not add any weight to the car, not add cost and not jeopardize the quality.

Once people realized their goal, they brought together the brake people, the development people and the chassis and suspension people and found they could revise the geometry to resolve the issue. “In other words, they got the perfect solution by thinking systemically instead of fighting among themselves,” says Zeniuk. “But, it takes time for us to become effective. It can take several years for us to not only use the tools but to become proficient at them and to get others around us to use them.”

Another group within Ford leading learning-organization efforts is the Electronic Fuel Handling division. The reason? “We decided that if we were going to be competitive, we had to learn how to bring things to the customer faster than our competition. We’re always trying to do the revolutionary things we need to do and figure we want to use all our energy making the best parts and not fighting over turf or back stabbing,” says David Berdish, organizational learning specialist.

Berdish knows that you don’t simply give people a copy of Senge’s Fifth Discipline and say, “Voila, we’re a learning organization. Instead, we have designed a model to look at different issues where we can practice some of the tools.” They use a brainstorming technique that “forces us to surface the mental models and learn together as a team. It exhibits personal mastery as well because we have to be open and honest, which is difficult if your boss is there because you might say some things that put yourself at risk,” says Berdish. “We find that it isn’t always the hard stuff such as machinery breakdowns or bottlenecks in the process that get in the way of our ability to perform and learn. It’s usually the soft and squishy stuff. We don’t do a very good job relating to each other.” So, rather than having traditional business meetings, the group spends a lot of time with people from different departments and functions trying to dialogue (speak openly). The dialogues can get intense.

For example, at one session an engineering manager said he couldn’t understand why the machinery always operated on Saturday. He really meant that he felt some of the line operators didn’t mind if the machinery broke down during the week because they wanted overtime pay. A union employee-one of the operators-wasn’t happy about the inference and said that they wouldn’t have so much trouble with the machinery if they stopped using inexperienced engineers and buying inferior material.

“It got very volatile and emotional,” Berdish says. “And, we surfaced these feelings and talked and talked and talked about it.” Certainly not a traditional business meeting. They realized that although they didn’t even know each other, they had a very strong relationship to each other.

After all the fireworks, they were able to work together to design equipment-maintenance specifications. They invited the suppliers and discovered that they were selling the division a lot of spare parts they might not need if the machinery was handled differently.

“All these things wouldn’t have surfaced if we had just allowed the tension to exist,” Berdish says. As it turned out, the division is saving “a ton of money” on spare parts, and the equipment-maintenance specifications that the three people designed are going to be the prototype for the entire company. And, says Berdish, it was all designed and developed just because three people finally began being honest with each other. They were able to surface the mental models (or assumptions), dialogue around it, and see their connectedness to each other.

Indeed, Berdish is such a passionate believer in the learning-organization concept that he and the Electronic Fuel Handling Division set up a joint venture with a local community college where the faculty works to help Ford, and Ford helps them learn about becoming a learning organization. Berdish’s division started in 1992 with two groups that included 38 people. By September 1, 1994, Ford had 20 teams involved (400 people) plus classes at the community college.

Harley-Davidson and Chaparral Steel: Shared vision and commitment produce bottom-line results.
Harley-Davidson Motor Co. has clear objectives when it comes to the learning organization. Hutchinson puts it this way: “For this company to be effective long term, we must have an organization in place that understands what caused prior mistakes and failures-and most importantly what caused successes. Then, we need to know how we can inculcate the successes and inculcate the preventive measures to avoid additional failures.”

Lofty goals, but ones shared by many in the organization. In fact, Harley-Davidson employees will tell anyone that the company wants the ability to develop processes and people that will ensure it has the capability for rapid, effective change based on an understanding of the whole business environment in which it operates.

To do that, they realize individuals have to have a shared vision of the values they espouse as a company-ideals such as intellectual curiosity, productivity, participation and flexibility. “We also operate on such values as telling the truth, being fair, keeping promises and respecting the individual,” Hutchinson says.

The motorcycle company’s story wasn’t always so positive. It was on the brink of extinction in the years 1982 and 1983. However, due in part to its shared vision and learning philosophy, the company has had a phenomenal turnaround. During the last three years, it has sold out its model-year products prior to the start of the model year, despite the fact that the company doubled production in the last five years.

Hutchinson began working with such concepts as the learning organization approximately three years ago. A year later, during a major strategic planning process, the management group used some of the systems-thinking tools to discuss issues in ways that they’d never been discussed before. Using tools from the five disciplines and some of the dialogue processes, the managers reached consensus around strategic direction, and rapidly assimilated it into an organizational plan.

Furthermore, creating a shared vision enabled the company to solve a major problem with its assembly facility. Because Harley-Davidson was trying to increase the number of motorcycles it produces, the managers believed they would have to build another assembly plant. Through diagramming techniques and a decision-making process that helped to identify the impact a decision had on people, on capital and on quality-and understanding people’s, capital’s and quality’s relationships to one another-they realized that they didn’t need to build another assembly plant. They could use an existing one in a different way.

“That’s a succinct example where applying the tools led to a much deeper understanding of the system and a better decision on a very strategic issue about the location of production facilities,” Hutchinson says.

Midlothian, Texas-based Chaparral Steel Co. also has seen that learning produces clearly definable, bottom-line benefits. At least 80% of the company’s 1,000 employees are in some form of education enhancement at any one time. And the education can range from psychology courses at the university to metallurgy. “When you’re looking at a learning organization, you have to take a holistic approach,” says Dennis E. Beach, vice president of administration. He says you must ask, “Does it lead to improving the bottom line?”

In Chaparral Steel’s case, it does. The company can measure approximately how many employee hours it takes to produce a ton of steel. When the company started, it produced a ton of steel with approximately 2-1/2 to three employee hours. During the company’s 20-year lifetime, the employee hours to produce the same tonnage has decreased to approximately 1-1/2. Even more dramatic, the average in the United States is six employee hours.

Many factors go into that productivity-education, participatory management, compensation structure, technology. It’s all intertwined. However, a key factor is making a commitment to employees and developing trust between all employees at the company regardless of their positions. Managers must be coaches working toward the same goal.

Chaparral has been able to track its bottom-line benefits closely. For example, the company wasn’t able to keep up with the demand for a product that comes off of a specific lathe so management determined that they needed two lathes to perform the same function. A manager approached the machinist who operated the lathe and gave him the authority and responsibility to find an additional one. This included traveling to Japan to see what they were doing, as well as traveling to other installations in the United States. The machinist selected a used lathe that was on sale from another company and saved Chaparral approximately $300,000.

In addition to this kind of trust and shared vision, the company is committed to individual lifelong learning and operates without proposals, memos and the like around these issues. Instead, they communicate by talking to each other. “It just needs to make sense,” says Beach.

Of course what makes sense in one company may not make sense in another. Every organization must find its own way. And the route may include other initiatives. For example, Harley-Davidson employed the learning-organization concept while reengineering. Others combine it with TQM efforts. “The fact that these popular theories or models have come to the forefront supports the concept that organizations truly are changing the way they think about the way to do business as we enter the new century,” MECC’s Gilbert says. “The main concepts of each-concern about quality, willingness to look at how all processes and work gets done, and an openness to learning at all levels of the organization and how they all work together-are critical to success of business in the coming years.

“That isn’t to say that all of these models are right for all companies,” Gilbert adds. “The essence of each of these is very important. However that doesn’t mean that every company ought to go out and hire consultants to implement these ideas. Companies need to think about who they are and what’s most important to them now as a priority. Know who you are and where to start. Know what’s going to be most important in the organization.”

Ron Martin will be the first one to tell you that global cultural diversity is similar to a two-way street—one with very complicated traffic patterns. As director of global employee relations at New York-based Colgate-Palmolive Company, he works with a broad mixture of people from around the world. Among them are women managers in Latin America, Asia and Europe, Latin-American managers in Eastern Europe and a black South African as the head of human resources for Colgate-Palmolive in Johannesburg. Martin, along with Colgate colleagues and executives in a few other companies, represents a pool of international pioneers who are tackling the daunting task of overseeing their organization’s global, cross-cultural vision.

“The first challenge is to define what cultural diversity means in global terms, not just in Western terms,” says Martin. “It’s taking a look at all people and everything that makes them different from each other as well as the things that make them similar.”

But how does the American agenda of valuing diversity—a concept that encompasses race, gender, sexual orientation, age, disability—translate into the homogeneous boardrooms of Japan and the hierarchical enclaves of Saudi Arabia? What happens when America’s best-and- brightest happen to be of African, Asian or Hispanic descent, female or gay? And, how do Euro-American males fare when they’re in societies in which they’re the minority for the first time?

Furthermore, how does the fact that we’re Americans play into all of it? And, underlying all of these considerations are the cultural assumptions we bring. How much can we expect other cultures to understand our assumptions? In other words, shouldn’t HR be moving toward a globally focused vision of diversity that includes international expats and employees of all origins as well as differing values?

Martin grapples with these tough questions every day. He’ll tell you what it means in a company that operates in more than 170 countries and receives about 70% of its $7 billion revenues from overseas markets.

He uses the word respect often.

Colgate-Palmolive Company frames its perspective by talking about respect for all of its workers. The company addresses this mission in a program called “Valuing Colgate People,” in which all managers participate. “We’re trying to get the message out that we’re people of all backgrounds able to work productively together,” says Martin.

Through a combination of individual and team exercises, role playing, videos and other educational material, employees work through a variety of diversity issues that lead to valuing differences because they contribute to organizational goals. The first day of the program is the global section. It focuses on themes and values of Colgate: caring, global teamwork and continuous improvement. These values are corporatewide and give Colgate employees shared goals. The second day focuses on issues within a particular country. In the United States, the focus is on race, gender, age, sexual harassment and individuals with disabilities. Other countries will concentrate on the key issues that prevent their people from treating each other with respect, such as gender bias and discrimination based on class or religion.

The next piece is to ensure that all the systems tie in with the underlying premise of respect. Colgate’s performance-evaluation systems, for instance, measure managers for exemplifying and reinforcing respect, says Martin. The systems and culture work together to form a cohesive unit to encourage the way the company is going to be managed now and in the future.

“We realize it’s a bit of a journey,” says Martin, “but that’s where we want to go.” The CEO and his team have already been through the program. The objective is to put 600 managers through the course in 1994 and an additional 800 to 900 more next year. In 1994, the company will probably use a lead-country approach where at least one country in each region—Latin America, Europe, Asia—will develop specific curricula for the second day of the program. Managers will be the first trained because they set the tone for their worksites and reinforce values. Then, the company will train its non-managers.

The difficulty when doing this, says Martin, is to keep out Western biases. “We want people to understand the Western piece, but we have to maintain objectivity and say just because we do something a certain way doesn’t mean that it’s the only way it can be done, nor that it’s the right way to do it.”

Instead of exporting the American approach, the company examines what kind of training is needed in that country. It attempts to blend the two cultures. For instance, Colgate ran a pilot survey in Brazil, which was sent out in translation. One of the questions was, “Do you feel you receive equal opportunity in the organization?” The term “equal opportunity” was unknown. Colgate had to rewrite the question and ask, “Do you feel you’re treated fairly?”

However, there are two companywide policies that won’t be adapted to individual cultures: sexual harassment and apartheid. While the latter is no longer the same issue it once was, Colgate has a worldwide policy that opposes sexual harassment in the workplace, regardless of the cultural mores of the country in which it’s operating. “That, too, is a matter of respect. If you’re harassing someone for sexual or other reasons, it’s showing total disrespect for the individual,” says Martin. “While you may not have a local law, our code of conduct states it won’t be tolerated.”

Sexual harassment charges are investigated by the in-country human resources department. Findings are communicated to the senior person at the location and appropriate action is taken, which could range from a reprimand to termination.

Colgate’s global HR policies are strategic, not simply programmatic. The company not only moves Americans around the world, but people from all its countries.

Martin attributes some of the company’s success to selection and preparation. “People who are asked to go on an international assignment have the maturity to be able to assess the issues they’ll be facing. They realize they’re not going abroad to impose American ethics on anyone; they’re going primarily because they have certain expertise they want to impart in the organization.”

And people are tough. For instance, he recalls when an African-American female first headed up marketing in Costa Rica. She was expected to prove herself. According to Martin, it wasn’t a position that had ever been filled by a woman, and in addition, she didn’t speak Spanish when she first arrived. Many of the employees weren’t used to African-American women in positions of authority. But after managing day-to-day operations with a high degree of competency, she was able to win her colleagues’ respect.

While the company has a welcoming process for incoming expats, the individual is expected to become more independent after understanding the system. Otherwise, the expat might be perceived as protected. “People will resent that,” explains Martin.

Furthermore, one of the ideas behind “Valuing Colgate People” is to transmit general principles regarding multiculturalism. “We hope people would understand each other better and be able to work together better. The point is to educate both the individual [who’s going abroad] as well as some of the work force as to differences and similarities,” says Martin. “Where there might be differences of skin and language, there are similarities in that they work for the same company, have the same values and goals, and that if they succeed [in attaining business objectives], they all succeed. If they fail, they all fail.”

People who go to another country, he stresses, have to learn the culture there, and the people who are there have to learn the culture of the individual who has just arrived. They come up with a mix. Basically, it’s a two-way street.

Companies must move toward a multicultural mindset.
Americans are obsessed with diversity—with valuing differences. And it’s no wonder. We’re a nation of immigrants. We think about concepts like the melting pot and mosaics, about acculturation and retaining ties to culture-of-origin. The diversity movement in the United States has an economic base, but it’s still grounded on valuing equality, recognizing differences and accepting them as good, says Michael Tucker, president of Tucker International, an international management consulting firm based in Boulder, Colorado. “Other nations may not place the same value on equality that we do,” he says. They may be motivated by other factors such as relationships and hierarchies. “That’s the challenge U.S. companies face.”

Hence, it falls to human resources professionals to pilot through the morass of questions and figure out how to approach global diversity. Two facts emerge. First, all Americans become culturally diverse once we leave the United States. Thus, we all need assistance to handle cultural differences when we’re overseas. And second, some Americans—typically women and certain American ethnic minorities—often face initial prejudice abroad and need more support to help smooth out a potentially bumpy road. Business has a lot to gain if it addresses the cultural diversity issue in a meaningful way. Whether a company simply exports Americans, transfers third-country nationals or brings individuals of other nationalities into the United States, people have to work together despite cultural differences.

“In the international environment, so-called soft skills become very, very hard,” says Barbara R. Deane, editor-in-chief of Cultural Diversity at Work, a Seattle-based newsletter. “They can make or break the situation.”

Clearly, the responsibility of human resources doesn’t end once the expat boards the plane. HR must develop effective in-country support that goes beyond finding homes and opening checking accounts. It’s HR’s job to create a commitment to new values, to help handle resistance to new ways of thinking, to get others to participate in a new sense of community.

HR must figure out ways to ease the transition for Americans and to assist managers and employees in the host country. Americans—especially if they’re of a minority status in the United States—need to be properly introduced and coached. Finally, we must acknowledge that we can’t export our agenda intact. If we expect the rest of the world to accept our ways, we run enormous risks and are doomed to a collision anyway. On the other hand, global business is multi-dimensional, and other cultures need to understand our ideas, too.

For American companies, the business stakes are high. In Global Human Resource Development by Michael J. Marquardt and Dean W. Engel, the authors say that since the beginning of the decade, U.S. corporations have invested $400 billion abroad and employ more than 60 million overseas workers; also, more than 100,000 U.S. firms hare engaged in global ventures valued at more than $1 trillion. And according to the 1993 International Relocation Trends Survey report by New York-based Windham International, a global management consulting firm, and the National Foreign Trade Council (NFTC), 61% of surveyed companies increased their expatriate population over the last five years, and 85% expect continued or increased expat activity. The survey shows that 90% of expatriates are males, which represents an increase in female expatriates from 5% to 10% in the United States and 11% in Europe. Experts believe this is a trend.

Although comparable figures on ethnicity aren’t yet available, diversity and international consultants concur that American minorities constitute only a handful of expats today, but will grow in the future. Gary Wederspahn of Boulder, Colorado-based Prudential Relocation Intercultural Services, says that of the approximately 1,000 people they trained in 1993, about 20 were American minorities. However, he believes this will change as we move toward Workforce 2000 and continuing heterogeneity in our work force. Furthermore, he points out that the enormous cost of one failed assignment means that no matter how few the numbers, cultural diversity should be considered an important business goal.

This is how the issue affected AT&T: Between 1986 and the end of 1992, AT&T grew from 50 people in 10 countries to 52,000 overseas employees in 105 countries after its alliance with NCR. Because the telecommunications giant continues to grow exponentially, it faces enormous human resources challenges, including cultural diversity.

AT&T has two major programs that affect its global objectives. One of them is called “Common Bond”; the other is a code of conduct regarding personal responsibility. “Within the context of these two frameworks, we address integrity, trust, respect and ethical business standards,” says Lynn Edwards, AT&T human resources director for Latin America and the Caribbean. The “Common Bond” describes the way AT&T is going to do business, treat its customers, act in the marketplace and treat its employees.

AT&T makes cultural diversity part of its business goals. “When you understand people better, the better you deal with business issues,” says Edwards. For example, if a client is explaining an issue and you don’t understand the culture, you might miss an opportunity. Doing your homework shortens the time frame in which you can become successful.

Edwards, who lived in Mexico for four years, often would provide diversity training in-country. Once she perceived that issues needed to be worked on, she hired outside consultants. They conducted independent interviews with key leaders, managers and employees and provided her with a report of the findings. As a result of the assessment, she could build programs to address key issues.

AT&T, she says, also is trying to build its human resources community within a country and region. At least three times a year, the company’s overseas human resources professionals in Latin America and Europe, for example, will meet in their respective regions to discuss different human resources policies, standards and issues.

Again, some of the diversity issues illustrate that tricky cultural differences need not be related to race or gender. For example, one of the most common problems is the different ways Americans and Mexicans conduct business meetings. Americans go to a meeting, someone makes an introduction, people work vigorously on the agenda concluded and the meeting is over. Business is expected to resume at another time, if necessary. That’s not the case in Mexico (as in many other parts of the world), where key customers must feel comfortable with you as an individual before they want to conduct business. It may take several breakfasts or lunches before they learn enough about your background and feel they’re on solid ground before they’ll address business issues. Moreover, sometimes a key executive in Mexico will keep others waiting for an hour or two, to the chagrin of an American.

These kinds of cultural misunderstandings can lead to business disasters. “One of our HR jobs is to monitor the work force for teamwork. When you marry all those units together, you need a diverse work force that can pull together and work out differences,” says Edwards.

Expatriates are viewed as Americans first.
Some companies, such as Encyclopedia Britannica’s international product-development division, send expats who have a very strong connection to the host culture. Typically, they’re Americans who’ve already lived in or studied the country for years or Americans of that cultural heritage, i.e. Korean Americans, Russian Americans or Chinese Americans.

Fukiko Ogisu, project coordinator for Japanese products, has worked with Chicago-based Encyclopedia Britannica for five years. She is a sansei (third-generation Japanese American) who grew up bilingual, speaking Japanese from birth with her parents and grandparents. Her parents maintained strict Japanese traditions, giving her intimate knowledge of the culture as it’s still practiced. Her language skills and cultural adeptness made her a valued, fully accepted member of the Tokyo offices. In fact, she felt honored at times because she was brought into meetings to help bridge the cultural and language gaps.

But even her level of cultural fluency didn’t always protect her from difficulties outside the office. She would sometimes encounter hostile, blank stares from Tokyoites when she asked directions in the subway; she would overhear groups of students gossiping behind her back that she was showing off her English.

And she recalls one incident that was very disturbing to her. One day, she was having an animated, in-depth conversation—in Japanese—with a waitress in a coffee shop. Ogisu then turned to a Canadian friend who was with her and asked a question in English. The waitress was so aghast and flustered by the unexpected, she raced from the table and refused to come back. A few minutes later, the manager approached them to take the order in broken English.

“I didn’t know how to take it. I could’ve deemed the whole thing as her being intolerant of me,” says Ogisu. “I look Japanese; my Japanese is unaccented; yet I’m a strange kind of animal.”

Ogisu’s incident was minor, but imagine if it had occurred in a business setting. What it points out is that even Americans of the same ethnic background as in country nationals face cultural misunderstandings.

Many businesses are going this route, however. According to Dale Hoiberg, vice president of the international product-development department, Britannica has had great success with its approach. But Tucker says that while this approach is gaining popularity, it can cause trouble, too. “It opens up identity problems—are you one of us, are you one of them and are you really representative of the company we want to do business with?” Furthermore, ethnic expat employees may or may not have the background in terms of history, politics and economics of the country. They also may bring with them class distinctions that are part of the unspoken social context and may have to overcome discrimination because of their ancestors’ class background.

That’s not to say that ethnic employees can’t be successful in their countries of origin, because they certainly are in many cases. However, the match must be brokered sensitively.

It’s important to be aware of these differences and keep them in mind during business dealings. Developing cross-cultural fluency, as with language fluency, means that Americans will be better able to understand what’s happening in its cultural context.

“Generally, the cross-cultural issues that come into play in business have to do with different styles of managing, communicating, giving feedback and negotiating,” says Rita Bennett, managing partner of Chicago-based Bennett and Associates, Inc., an international training and consulting firm. Overlay ethnic background, gender issues and sexual orientation, and the situation becomes even more complex. That’s why human resources professionals are relying more on individuals such as Clifford Clarke of Clarke Consulting Group, a Northern California-based consulting firm that helps culturally diverse groups work together. They consult with businesses to strategically manage cultural differences.

Clarke believes that one of the most shocking revelations comes when white males discover they’re in the minority. The next surprise is dealing with the fact that all Americans are seen as Americans, first—in Europe as well as Latin America and Asia. In fact, Americans who expect English-speaking London to be an easier assignment than Beijing are in for a surprise. Visiting Great Britain as a tourist is different than living there. “The Brits are so fundamentally different from Americans. They’re reserved, shy and formal. Americans are more open, friendly and share their life history easily,” says Karen Deane, managing director of London-based Karen Deane Relocations. While change is slow, some British companies are beginning to realize that everyone, including Americans, need assistance as they adjust to work in Great Britain. “Multinationals are looking more closely at cultural issues, and they’re making plans in the beginning,” she says.

From country to country, the list of differences goes on: how we view time, how we share information, how we view relationships. It becomes especially complicated when trying to work as teams across cultures. Obviously, human resources first course of action is extensive training. Then, consultants such as Clarke work with individuals in “process consulting” to develop a team player approach.

For example, he may devote three days to strategic planning sessions and training for a joint venture partnership in Japan. Then, he’ll organize a meeting of the Americans going to Japan, in which consultants observe and focus on process and behavior. It’s their job to periodically stop the flow of content and focus on the process. For example, when Americans cut each other off in conversation and argue, the consultant will explain how that will be interpreted—that they aren’t a team, they aren’t prepared. If the Americans say they want to hear from the Japanese, but play tag conversations for 30 minutes, the consultants point out that they haven’t been listening and that their words and actions don’t agree.

This kind of attention to the details of behavior that are culturally motivated is one extremely successful way to overcome some of the big hurdles that come from cultural misunderstandings. “Being successful in another culture requires the ability to adapt; to be able to shift frames of reference. You have to be able to set aside the whole view of the world that you’ve grown up with and say, ‘What are the dynamics here? What do I need to pay attention to?'” concurs Barbara Deane.

Cultural diversity perspectives vary from nation to nation.
Americans can’t assume that our views are universal. “There are major differences in the way we approach diversity issues,” says Martin Bennett, partner and director of training for Bennett and Associates, Inc.

“The basic cultural orientation of the U.S. is of individual human rights and equality as opposed to societies that are structured around collectivity, role definition and reciprocal roles.”

The People’s Republic of China is a good example. Both Martin and Rita Bennett have dealt with ever-burgeoning cross-cultural issues regarding China. In fact, their company’s training programs for China have increased from 1% of the total cross-cultural training in 1992 to 27% of it in 1994.

The rules are so very different. “Americans love to talk about empowerment,” says Martin Bennett, “but it’s impossible to translate the word in Chinese without it sounding like a revolution. When we look at Confucian society, everyone is in a reciprocal relationship to everyone else. There’s father-son, sovereign-subject, husband-wife. Superimpose onto that the system of communism in the People’s Republic of China, and you have two systems operating at the same time.”

Think of the complexities that arise when Americans attempt to do business in that cultural milieu without understanding the background. It becomes especially tricky in situations where Americans are transferring technology and management skills and attempting to create organizations with the Chinese. At that point, it’s very valuable to work with both sides of the equation. Bennett & Associates trains Americans to work effectively with the Chinese and also work with the Chinese to become capable learners in the transfer. They use role playing and other traditional forms of training and then bring together the two groups at the onset of projects. They talk about the differences and similarities and discuss what they’ll all have to work on as the project ensues.

“The work is aimed at enabling participants to develop skills for analyzing culture and adapting behavior appropriate to that culture as well as neutralizing stereotypes that aren’t useful,” says Martin Bennett. “The ultimate goal in a work situation is to move to a third culture that’s neither Chinese nor American but the most effective synthesis of both.”

Training isn’t enough—managers must lead by example.
There’s no way around it. Stereotypes and prejudices do exist. They may have complex origins and be completely rationalized in their societies, but they must be acknowledged and addressed. “Racism exists all over the world, not just here,” says Barbara Deane. “You just have to recognize it as part of the landscape to pay attention to it, to know it and to make the best placement possible.”

For several decades, American companies wouldn’t send women or ethnic minorities overseas, particularly to Japan, says Paige Cottingham, director of the U.S.-Japan Project at the Washington, D.C.-based Joint Center for Political and Economic Studies, a think tank on African-American issues dedicated to forging better U.S.-Japan ties. There was the perception that women and African Americans couldn’t be effective representatives of their company and wouldn’t be taken very seriously.

“One of the first things that’s begun to change is the recognition that if we’re to promote diversity, we want to lead by example,” says Cottingham. “The first step is to include African Americans and women and other minority group members in the work force that goes overseas. The second step is to prepare the American to deal with the different environment so he or she has a sense of what to expect. That will reduce some of the tension and likelihood of making faux pas. Finally, we have to prepare the people in the foreign office [in this case, the Japanese office] to receive these individuals.”

One of the most important, and frequently overlooked, aspects of ensuring the credibility of women or people of color is their introduction to the new work environment. “The way in which someone is introduced is crucial,” says Marian Stoltz-Loike, director of program design and development at Windham International. “Having someone who has power in the company introduce you to others or take you to the clubs that are important and introduce you to the key people is essential.” This tells others that senior management supports the individual.

In addition, a lot of business is conducted outside the office. Letters of recommendation to clients can go a long way to building confidence so that business partners respect the individual as well, says Stoltz-Loike. If an adequate stamp of approval and recognition of authority is communicated, individuals may even make their uniqueness work for them as a business advantage, because people immediately recognize who they are.

She believes that international team building is key. And she believes it should continue in the host country. Using role playing, case studies and cultural-sensitivity exercises highlighting interaction, the process would focus on how preconceived stereotypes negatively impact the business environment.

Furthermore, Stoltz-Loike thinks that it’s important to know whether there are different ground rules for women when establishing relationships and building trust with male colleagues. If there are few other women of influence in the company, she suggests it’s important to consider how to help female employees establish a level of equality with males.

“Cultural training ahead of time also helps individuals know where the obstacles might be and facilitates their developing a strategy as to how to hurdle those obstacles,” says Rita Bennett.

One of those strategies is to find a mentor who can talk about his or her experiences and help the expat learn where to find the best support and how to develop a maintenance strategy. “This is really where HR can work with management to make sure there’s at least one mentor for the individual,” she says. Ideally, there’s a host mentor and an expatriate mentor. She believes that formal mentoring systems, established through the human resources department, are most effective. The companies that have the greatest success with their mentor programs include their mentorship as part of the manager’s performance evaluation. “From a cultural diversity aspect, having a mentor is invaluable, and anything human resources can do to facilitate that is laying the groundwork to support the success of the individual,” she says.

Interestingly, when handled well, minorities and women don’t always have a more difficult time initially. Some people suggest that they may have some advantages overseas. For one, women demonstrate higher use of relationships in business, which is vital to work in Asia. For another, there’s evidence that the cultural experiences of American minorities in the United States may make them more able to cope with being outside the mainstream culture when they go abroad.

“There’s some research to support the idea that those who come from subcultures have a greater ability to adapt to other cultures,” says Rita Bennett. “They may be more capable in dealing with the sense of isolation because they’ve already had to identify their own racial characteristics in a multiracial society.”

Cultural fluency—the ability to conduct business in a diverse, global environment—stands the greatest chance of success when it’s part of an overall plan. “It’s important to very carefully develop global careers,” says Tucker. “If you know a few years in advance that an individual is going on assignment, you can thoroughly prepare. You can train them well, set up a whole series of developmental activities with an international career-development specialist and help the family.”

The organization—with help from human resources—can work toward intercultural team building. “When we think about global business, we shouldn’t be thinking about Americans doing American business in an American way in another country,” says Clarke. “That’s what was meant by the old term internationalization.

Going global isn’t simply taking your business abroad and using the resources. It’s learning how to do business in a global way that supports, energizes and empowers people of all different cultures, including yourself.

Successful expatriation doesn’t just happen-it requires foresight and careful thought. Here are a few tips:

• Consider overseas assignments part of the developmental process. Groom and prepare people for their jobs abroad. They can learn language, culture and prepare for additional stressors well ahead of time
• Know a lot about the country to which you assign people. If there has been violent activity against people of the same ethnic background as the expatriate, consider consequences carefully

Give the candidate thorough and honest information about the country under consideration. Some individuals may not want to deal with the difficulties; others will want to take on the challenge

• Allow time for language acquisition. Language teaches culture in context
• Provide cross-cultural training for the candidate, spouse and family
• Help the expatriate understand the business culture of the destination country. How do things get accomplished? What are the management styles? For example, prepare people with seminars on intercultural communication and negotiation in their intended region
• Don’t assume that individuals of the same background as those in the host country will not need education and discussions about the new culture. Offer them training as well
• Encourage the expatriate to get involved in the new culture. This helps to develop a social network and also provides more information about the culture. Furthermore, local people regard the interest in their culture with respect.