Chapter 1 - Global Manager PDF

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Chapter 1 Global Managers Learning Objectives in this Chapter The involvement of a company within the global market forces internal change and dictates close analysis of foreign cultures, buying preferences, economic influence and business environment to remain, or become, profitable. Managers within globalised companies need to become sensitive to the changing demands placed on them. Challenges that confront managers in the global business environment are explored across a broad topic list. Issues such as ethics, diversity, and culture are considered in-conjunction with the expanded fields of corporate strategy, sustainability and human resource management. This chapter examines challenges managers face in the global business environment and highlights competencies suggested for the attainment of superior and sustained personal, and organisational, performance.

Introduction How companies become and remain international in scope and how they come to grip with an increasingly competitive global environment requires a shift in thinking integrating global leadership and mindset (Khilji, Davis & Cseh, 2010). The international arena is new terrain for many managers, but it contains the lifeblood for many organizations that are ready to tap new sources for economic prosperity (Prahalad & Doz, 1987). In the new economy, almost everyone's work is global in scope, whether they travel the world in several different jobs or spend their entire career in one city. Global experience is becoming essential for managers and an economic reality for organizations. As globalisation intensifies, managers who can integrate their businesses into the global market place is becoming important (Zoogah & Abby, 2010; Lenartowics & Johnson, 2007). Yet many senior leaders cite as their major obstacle to global effectiveness not a lack of money, products, or strategies, but a shortage of people who are prepared to manage and thrive in the face of globally complex situations. This chapter helps managers understand not only what skills are needed to manage globally but also how to develop them. The importance of global managers cannot be under stated. Global managers, by definition, understand the dynamics of cultural environments and are able to appraise and balance differences and behave appropriately (Cappellen & Janssens, 2005). However, according to a survey of 110 fortune 500 companies only 15% of the companies have the global managers and more than 67% indicated that their managers has less capabilities than the required levels (Beamish et al 2003, 228229). Hardin, Fuller, and Davison (2007) based on a study of global workers found 1

that most lacked the required competencies to work effectively in a diverse globalised environment. Barakat et al (2015), in examining global managers, implied that global managers should increase their cultural understanding in order to improve their job satisfaction and ultimately their performance in the international context. It is a clear indication of the fact that the evolution of the global manager is at the infant stage and it needs to be developed a lot in order to meet the ever growing demands of the multinational corporations as globalisation continues to take place at accelerated pace. Drastic changes such as rapid globalization and technological advances have altered the ways organizations conduct business during the past decades. Although globalization has taken place throughout the last century, its process has recently accelerated. More and more organizations have gained certain international dimensions although there would never be total global homogenization. In response to the turbulent and reactive global economic environment, contemporary organizations are in great need of global managers who are capable of effectively handling the complex issues beyond domestic boundaries. At present, the terms “globalization” and “global manager” are being popularly used despite that the concept and the development of “international manager” has begun since 1970’s (March, 1996). As this chapter examines a couple of different researches and practices across the last decades, the term “global manager” and “international manager” will therefore be utilized interchangeably. This chapter seeks to address issues regarding the concepts on global manager and the key competencies required of effective global managers by reviewing and comparing the contentions made from different researches. The paper also attempts to explore the cause of the need for global managers in the current global business trend. Roles of global managers and principles regarding how to develop the effective managerial capabilities in the volatile global business environment will be further discussed. ____________________________________________________________ Activity 1.1 Walker & Walker (2003) contrasts different stages of the global environment, “Change in a highly global environment is no longer progressive and incremental, as it was in the 1990s; instead, it is characterised by dramatic, chaotic fluctuations in conditions (p, 4). The fundamental environmental conditions surrounding business continue to change at a rapid pace.” The following table illustrates some characteristics that shape the business environment of the past against the more recent and serves to highlight some challenges today’s global manager will face. 1980s and before

1990s and after

Continuity Planning Adjustment Diversification Management Instruction Individuals

Change Coping with the unexpected Transformation Focus & Segmentation Facilitation Learning Project Groups & Teams 2

Knowledge Scale & Security Uninformed Customers National Boundaries

Competence Flexibility, responsiveness, and speed Demanding customers Freedom of movement

For each item, provide an example and explain how the change has taken place to influence global manager behaviours ___________________________________________________________________

Global Manager as a Definition The demands placed on managers seem at times ever increasing. Not only are human resource and industrial relations ‘soft skill’ requirements growing, but also the marketplace for products around the globe is necessitating different business strategies to be applied by managers. In Australia with a relatively small market size, particularly for niche or high technology products, a global perspective is imperative for corporate sustainability. The changing market and workplace places managers in the value-chain with great number of complex challenges. The multidimensional complexities of the global market and workplace forces successful managers to be more knowledgeable than ever before in an attempt to reach and maximise their organisation’s capabilities in an always-changing environment. The global manager is then a pivotal link between the company’s capabilities and the global market requirements (Zoogah & Abby, 2010). He must glide between the human needs of multi-cultural staff or customers, consider the strategic opportunities of the company in varied markets, and be responsive to the ever changing mix of ethical, social and business relationships that influence productivity (Cappellen and Janssens, 2005, 2010; White, 1990). Plenty of academics have tried to define global manager from different perspectives. Gary Ferraro (2002) states global managers are the ‘global brains’ who have an exceptionally open-mind to function in culturally different settings and succeed in the international marketplace. He claims that global managers need to have the knowledge and competencies to deal with global operations, competitions and be adaptive to different international cultures in the 21st century. Global manager is also defined as the one who “must be able to act locally and think and plan globally”, with “the ability to combine an in-depth understanding of their own cultural underpinnings with an openness to foreign cultures” (Osbaldeston, 1993, p.26). Some scholars describe global managers as people who are not only “incisive” with business in their domestic domains but also sensitive to global issues and generous, patient to adapt to new cultures (Barakat et al., 2015; Brake et al, 1995; Bartlett, and Ghoshal, 1995). Many of those humanistic-orientated concepts in respect of international manager have centred on the subjective, psychological state of the manager (March, 1996). Such definitions have somewhat slighted the business aspects as they stress on the sensitivity, awareness, adaptiveness and cultural knowledge required of global managers. Nonetheless, there are some key dimensions associated with global managers. Generally, a global manager is one who has command of relevant professional 3

knowledge and skills as well as possesses a global perspective and together with adaptability (Zoogah & Abby, 2010; Lenartowics & Johnson, 2007; Lane, DiStefano & Maznevski, 1997). Irrespective of country boundaries, a global manager should have the capability to comprehend the technical aspects of business and effectively respond to a variety of issues such as the organizational operations, the market, and the competitors. Furthermore, global managers must understand the global trends and different cultures, think from a global perspective, adapt their mindset to multiple relationships, and then appropriately integrate their skills to the increasingly complex global realities simultaneously.

The Need for Global Managers Globalization and a number of emerging issues such as changes on demographics and technology have stimulated the need for global managers (Rego, Clegg & Cunha, 2012; Stanek, 2000). Globalization has much enhanced economic interdependencies in the world and made political borders and constraints become progressively more irrelevant. Therefore, the issues concerning global business are mainly directed toward considerations for the dissimilarities in cultural, economic and societal environments of different nations. At present, numerous organizations are increasingly competing on a global basis for resources such as supply chains and customers. The world has becomes a “global marketplace” in terms of these dynamic and complicated forces (Lane, DiStefano & Maznevski, 1997). As human resources is deemed as one of the most strategic assets, global managers are therefore highly sought after by various organizations, in order to gain competitive advantages and more benefit in the global market. However, despite the increasing need for effective global managers, a majority of organizations including large multinational companies have not indeed paid great attention and done well in this respect. One survey of 110 Fortune 500 firms indicated that as few as 8 percent of the surveyed companies have actually established a set of systematical procedures to identify, train, maintain, and advance global leaders (Beamish et al, 2003). Another study reports by McKenzie highlights that only 7 percent of senior managers in the UK think that their companies develop global leaders effectively whilst 30 percent of US companies attribute their failure to capture International business opportunity to the lack of lack of global leadership skills (Gurdjian, Halbeisen & Lane, 2014). This reality reveals that there is a big shortage of successful global managers and the demand for them will be very high across borders. Today’s organizations, particularly multinational companies, have progressed beyond national boundaries and established global networks. At the core of the global networks are the global managers who have the ability to cope with the unique needs of local customers, cultures, market trends and social environments in the a complex, changing and ambiguous global settings (Caligiuri & Tarique, 2009; Conn, & Yip, 1997; Sinclair & Agyeman, 2005). As such, there arises the need for global managers to effectively distribute the critical assets and resources to achieve global success of businesses.

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The Functionalist Viewpoints In response to the need for global managers, many researches have attempted to identify the roles and tasks related to global managers. The functionalist viewpoints consider organizations as a whole and focuses on the interaction of managerial functions and roles of global managers in the global business settings. These scholars have proposed a number of roles linked with effective global managers. Roles and Functions of Global Manager Bartlett and Ghoshal (1992) have classified three primary types of global operations and divided the managers into three different levels accordingly. Firstly, they suggest that, to operate for global scale efficiency and competitiveness, the global business managers are needed and their role is to be a strategist, architect, and coordinator. Secondly, the country managers who act as a sensor, builder and contributor should be responsible for business at the national level. The third type is the functional managers whose role is a scanner, cross-pollinator and champion whilst they are accountable for building organizational learning and leveraging capabilities across national borders. These three sets of different roles of global managers are related to the business, country, and functional dimensions which cover different perspectives and capabilities. Although all three categories of roles involve certain degree of global mindset, effective global strategies should be appropriately created by connecting these three dynamics to balance and share resources worldwide (Bartlett, and Ghoshal, 1992). Importantly, irrespective of the level, global managers play a critical role to integrate and leverage the multiple concerns and challenges in global context. According to Ferguson (1988), there is eightfold path for global success, which corresponds to the roles of global managers. The research proposes that the global manager should be a global planner, global manager of people, communicator, researcher, networker, and negotiator. To be successful, global managers need to plan the corporate strategies and influence employees to global operations. Global managers emphasize effective communication in global management by researching information and knowledge from target countries (Vernon, and Wells, 1991). They are able to balance local and global tension and negotiate internationally (Osland & Bird 2008). Global managers need consciously play the negotiator and networker roles to build their network into the long term profitable relationships in global market. Although a range of roles and tasks could be associated with global managers, it is more effective and relevant for a global manager to function as an integrator in the complicated global context. The integrator is typified as the global manager who is competent to integrate skills and knowledge with a global orientation and appropriately play the role based on thoughtful judgment of the particular situations (Kedia, & Mukherji, 1999). The integrator can create a flexible network of relationships with multiple cultural perspectives and skilfully bridge national differences toward managerial effectiveness (Baird, 1994). The integrator role of the global manager is to act as a catalyst to form a global perspective within the organization. This type of global manager is not only able to 5

understand the internal organizational dynamics but also sensitive to global forces such as cultural diversity and can manage the differences between people, values, and cultures in consideration of the complex environment. The higher the degree of integration of the functions, the more effective the global manager will be.

The Competency Frameworks Most of the functionalist viewpoints are centred on describing the functions, tasks and roles of successful global managers in broad organizational settings. Nonetheless, they have somewhat failed to study and prescribe the essential competencies and attributes associated with individual global managers that lead to effective performance. Managerial competency underlies individual characteristics of the person and are causally related to effective or superior job performance whilst the competencies include traits, skills and social roles (Boyatzis, 1982). Global management competencies should embed both the strategic aspect, which encompasses the ability to cope with global strategic challenges as well as on the cultural aspect, which is the ability to cope with cross cultural issues (Bücker & Poutsma, 2010). Underlying Abilities of Global Manager Irrespective of the global or domestic environment, many capabilities required of global managers are similar to those of non-global managers, such as creating vision and instilling values (Kedia & Mukherji, 1999). Four leadership characteristics have found to be universal, which comprise idealized influence or charisma; inspirational motivation or vision; intellectual stimulation; individual consideration (Bass, 1997). Global managers should have a set of basic capabilities that enables them to successfully manage the complex challenges whether in a global or a local context. It is stated that five managerial capabilities are generally essential for good leadership, which contains ability to manage people, action and information; ability to cope with pressure; and core business knowledge (Dalton et al, 2002). Effective global manager must be able to demonstrate high personal integrity and emotionally influence others toward the achievement of organizational objectives (Beamish, 2003; Dalton et al, 2002). Global managers should also be competent to take actions such as negotiation, which is claimed as the single most important global business skill by Adler (1997).

Global orientation of Global Manager Apart from a common set of attributes, global managers need to have specific competencies that are characterized by the dimensions of distance, unique country infrastructures and cultures in addition to their local experiences (Kefalas & Neuland, 1997). Global managers are required to effectively deal with uncertainties, consider cultural diversity, manage conflicting forces and handle relationships with others from the different social and economic perspectives beyond boundaries. Successful global leaders are somewhat inquisitive and demonstrate particular characteristics, including global business and organizational savvy, the ability to 6

manage ambiguity as well as the ability to balance globalization and localization pressures (Beamish et al, 2003). Four pivotal capabilities are prescribed for global managers to effectively work across multiple time zones, country infrastructures and cultural differences (Dalton et al, 2002). Although the pivotal capabilities are expanded on the essential managerial capabilities, they are specifically related to performance for managers in a global role across the boundaries. The pivotal capabilities are indispensable for the global managers and they consist of international business knowledge, cultural adaptability, perspectivetaking, and ability to play the role of innovator (Dalton et al, 2002). International business knowledge indicates a concrete understanding of the business and the ability to leverage the business within and across all the countries whereas cultural adaptability is the competency to be aware of the information and adapt to the cultural expectations (Barakat et al., 2015). Perspective-taking capability represents the cultural empathy required of global managers to understand and accept multiple perspectives among different people, and build appreciation and tolerance for maximizing the potential of globalization. Furthermore, global managers should also have the ability to play the role of innovator to add new values and benefits in the context of globalization.

Effective Global Managers As mentioned previously, numerous scholars have proposed a variety of roles and competencies related to global managers. However, the success of global managers lies in a framework combining several interrelated factors with a global perspective. This framework consists of specialized knowledge and skills as well as the situational mentality that meaningful...