Managing talent across national borders: the challenges faced by an international retail group

International trade

Introduction:

The challenge of managing talent across national borders, M. Boussebaa and G. Morgan studied the problems that a British retailer faced after acquisition over a French retailer, when the British tried to deploy a common Talent Management system across both countries. Due to differences in educational systems, training methods, expected career paths and rewards (e.g. Lane, 1989; Bournois and Metcalfe, 1991; Sparrow, 1995; Ramirez and Mabey, 2005) soon it appear to become a conflict between the managers in UK and France. After many years and trying various methods the company was not successful in its approach and basically the British company’s integration model had failed. This lack of success led to that the management in British retailer questioning their initial assumption that the establishment of a common Talent Management system was the only conceivable way forward, and even once the British Head of Management Development said that probably the entire senior management of French company should be “scrapped” in order to assert absolute control and attempt to “sort out problems in French company”. Finally British HQ switched away from the idea of developing a transnational managerial cadre and focused their attention on financial control as a means of disciplining their French subsidiary.

During the case study M. Boussebaa and G. Morgan suggested that the main problem occurs due to the British did not take institutional differences into account and ignored the cultural literacy and tried to impose they idea of managerial potential and the way managers should been identified, trained and promoted to French company.

After haven looked through this case study and compare it with some real-life cases from other businesses, we propose, the MNC should adopt “convening power” in their management strategy in order to solve the problems and put more endeavor into understanding the cultural influences and other important factors like, social structure, organizational structure, recruitment process, training design and internal communication that MNC should consider in the process of change.

Convening power (In context of managing talent)

Instead to use the traditional governance control which relies upon discipline, hierarchy, and bureaucratic specialization, the power of convening and new organizational management system is built based on flexibility, consultation and networking. Convening power has been used by many other companies and it has been proven to be very successful, specially when it come to international and cross cultural management, there are even references to the fact that the World Bank and the UN have been adopting convening power to build up a new global managerial system. The success of this method is mainly due to its well considered planning development process, as it is built through consultation with various people with different set of knowledge within and even from out side of the company, it has been proven that most often the future plans are much more considered and appropriate. Furthermore, recent studies show that people are more motivated to follow the plan and meet the target when they have personally participated in the planning process.

In this case, the British management should have consulted with French managers (better this way) before developing any management training plan or Talent management. Also, it would have been useful if the British used a French consultancy agency to help them with planning development and implementation.

Convening Power

Cultural differences

Components of culture do have impact on business. According to W.W.H, there are several elements that affect business between different nations. Culture includes traditional beliefs and habits which belong to specific group or society. Factors such as aesthetics, values and beliefs, manners, social structure, religion, education and physical environment play a key role when it comes to doing business abroad. To negotiate business with different cultural background societies you have to be aware of these factors and be cultural relativistic while adopting to them.

Grandes ècoles vs. Practical experience is broadly discussed topic in this paper. Should we manage French-way, taking the highest degree of education by entering schools which are above traditional universities, or British-way where work experience is favoured and what is above academic achievement? According to British management, work experience is considered more important than intellectualism. To understand their cultural differences within education, it could be more easily to understand by looking at the Geert Hofstede’s first dimension Power Distance[1]. It illustrates how the power is distributed between group members within society. Hierarchy vs. Egalitarian status is a key term. Someone would claim that French have more vertical (hierarchy) system while British are considered being very horizontal (egalitarian). It explains why the French employers prefer “grand ècoliens” and why the British care less about your diploma.  Their values and beliefs have different social structure and which are grounded into them from the year they were born.  Therefore adoption to British or French management wouldn’t be so simple, because both of them would prefer to deal their own way.

On the other hand someone would claim that this is a pure sophisticated stereotyping. To understand one specific culture you cannot describe it as a “first best guess”, you have to look at its context. There are several examples which illustrate that British employers require MBA achievement and educational qualifications before you even would be considered as a potential employee, while the French, according to this article, require grand ècoliens. We are sure that to participate in management you’d rather have to be both well-educated and own practical skills. This is not about how we should manage in the future and who is going to form it, it is more about how should we divide those cultural differences and plot them together.

Social Structure and Class System can create problem in managing talent

The way in which societies are organized is intimately related to their culture background. According to Wild, Wild and Han (2006, p. 60), social structure embodies a culture’s organization, including its groups and institutions, its system of social positions and their relationships, and also their resource distribution process.  Furthermore, the social structure in which one company operates certainly affects business decisions and the costs of doing business in that location.

By attempting to introduce the British company talent management process in the French firm, the British Personnel Director ignored the existing social structure that lead the French human resource management decisions for many years. Such an imperialist minded action created resistance in the French managers, who wouldn’t make an effort to adopt the British talent management framework once their culture was being mistreated. The consequences were negative for both companies once they misunderstood each other intentions, prejudicing the group’s business.

The French firm’s talent management program was based in a class system in ‘which personal ability and actions determine social status and mobility’ (Wild, Wild and Han, 2006). Even though the important thing for one to have high status in a French firm, the diplôme, has no importance for the British firm, the British imposure of its talent management framework was very amateur, once it didn’t considered the French regent social structure. An appropriate talent management framework has to be suitable for every culture organization in which it will be applied.

Organizational Structure: Centralization vs. Decentralization

Centralized decision making means making decisions on one location at a high organizational level. Decentralization decision making is making decisions on lower organizational levels. According to Wild, Wild and Han centralized decision making is helpful when coordinating operations of international subsidiaries. Decentralized decision making is beneficial when fast-changing national business environments put a premium on local responsiveness.’ (Wild, Wild and Han, 2006)

In this case the British company wants to implement a talent system into the whole organization. In the first place the implementation of this new system was decided and controlled at a high-level vantage point. The French company had to realize the implementation in their own company and they were free to manage the operations as they wished. The implementation of the talent system could have failed, because it should have been implemented on a centralized level.

In cross-functional teams employees who work at similar levels in different functional departments work together. The British firm had no cross-functional teams in the British and the French company. Also, global teams were not formed. A global team is ‘a group of manager from both headquarters and international subsidiaries who meet to develop solutions to company-wide problems.’ (Wild, Wild and Han, 2006)

Hiring and Managing Employees

According to Wild, Wild and Han, “human resource management is the process of staffing a company and ensuring that employees are as productive as possible.” By ensuring that employees are selected and trained (Talent Management) in the same way, the company can better ensure that skills and abilities of employees are aligned with the company’s goals. In this case, when B-firm and F-firm merged, B-firm saw that there was a problem with ensuring that F-firm’s employee’s would be productive. And this is due to the different HRM practices within the 2 firms and this is evident in the recruitment and selection of human resources by both firms.

F-firm’s stance on recruitment of human resources is that so long as the person holds a grandes écoles, the person will have the ability to run a French organization. On the other hand, B-firm feels that your ability is not solely dependent on a piece of paper but on how much experience has sharpened your management skills. This is due to the different perceptions on paper qualifications in France and Britain. In France, graduates of grandes écoles went through tough selection process and were given rigorous training hence were considered the crème de la crème, a status and regard that they can hold on to for the rest of their life. Whereas in Britain, there are numerous management schools hence the higher percentage of people with paper qualifications which makes it hard for firms to distinguish better candidates solely based on paper qualifications. Thus B-firm believes in the potential of their employees as opposed to F-firm whose cadres believe that your potential would have been shown in your education or at the point of employment. This explained the resistance from F-firm when B-firm wanted to measure potential of employees and to train and develop even the cadres.

We see both sides suffering from culture shocks. In WWH, a culture shock is defined as “psychological process affecting people living abroad that is characterised by homesickness, irritability, confusion, aggravation and depression”. Both sides are irritated and confused by the way things are done. Each side has its own belief on how things should be done and this belief was developed in early stage and is the norm in each of their respective countries.

We see the failures of many acquisitions, mergers and alliances like the one between BMW and Rover, which failed due to different management styles. Hence some are led to believe that differences in work culture and style can hinder the success of a company. In the case between Nissan and Renault, a Japanese and a French firm, the result was very successful. Ghosn[2], who led the alliance, did not impose work ways on the Japanese employees. He respected their working culture and brought change from within the company. Hence in this case, there should be compromises on both sides and they should learn to understand each other’s work culture and our group’s stance that both paper qualifications and practical skills are important.

Of course, apart from their working culture, we must also consider the behavior of the French and the British. French are thought of to be proud of their own culture. They may not be willing to compromise even if the British does. Instead of only deploying the British to France, the firm might want to also deploy some French managers to Britain.

Training and development for managing talent

So far we understand all organizations have mainly three types of resources. These are: physical, financial, and human. They are all equally important. However, because it is difficult to measure the value of human resources, because they cannot be depreciated as physical resources or used to reflect the net worth of an organization like financial resources, management often overlooks the importance of this resource. It is only in recent years, often termed “the third stage of industrialization”, that some attention has been given to human resources as a core competitive advantage (Browne, 2000). In fact, Bogan (1994) emphasizes that human resources may be more valuable than other competitive advantages due to higher barriers of imitation. Human capital consists of the knowledge, skills, abilities, attitudes and experience required to accomplish an organization’s mission. It also includes an organization’s ability to recruit and retain employees.

Organizations must ensure that their corporate cultures are conducive to the achievement of overall strategic objectives. To increase an organization’s human capital, the corporate culture should inculcate the values of continuous organizational and individual learning; in short, a learning organizational culture (Nevis et al., 1997; Blanchard and Thacker, 1999). Fostering a learning climate will lead to an organizational learning that can capture and deploy learning to those who seek it and, when this is coupled with individual learning, human capital within the organization will be greatly enhanced (Blanchard and Thacker, 1999; Nevis et al., 1997).

According to Gilley and Eggland (1989) there are three fundamental component areas of human resource development: individual development, career development, and organizational development Individual development usually comes in the form of training and development activities provided to help employees improve skills and knowledge for their current jobs. For example, Motorola increases its human capital by ensuring that every employee has at least 40 hours of job-related training annually (www.motorola.com). Career development focuses on identifying the individual interests, values, competencies, activities and assignments needed to develop skills for future jobs (Gilley and Eggland, 1989). It can be part of a performance management system.

From Wild, Wild, Han (2006, p 45) we could see that there are few methods of cultural training which mentioned as: environmental briefings and cultural orientation, cultural assimilation and sensitivity training, language training and field experience.

Environmental briefings refers to the most basic level of training   which include local housing, health care, transportation etc. Cultural orientations offer insight into social, political and economic institution. Cultural assimilation teaches the cultures values, attitudes and manners. Sensitivity   training teaches people to considerate and understanding of other peoples feeling and emotions. Language training entails a trainee into the minds of local people. They trainee learns more about behaviour of local people. Field experience means visiting the culture, walking streets to its cities and villages to get in touch of people more closely (Wild, Wild, Han 2006, p 457).

The conflicts between B and F firm which we have come across in this paper due to in absence of proper cultural training methods of the employees. When B firm took over F firm it did not recognize need for proper cultural training of the employees of the F Firm. In this paper we were unable to know that what type of training and development method B firm undertook to train employees when taking over F firm. So we could apprehend that B firm did not try to understand the cultural differences nor it tried to educate the employees of F firm regarding their management style.

Recruitment and selection processes are responsible for placing diversified talent at all levels within a firm. Pfeffer (1994) indicates that sourcing and retaining valuable human capital have become a competitive battleground. All organizations, whether big or small, compete aggressively for the best talent. Such competition is very prevalent today, especially with globalization forces that have led organizations to search actively for agile, expatriate managers who can go abroad and grow a global company.

Mission statement and core competency

International BusinessAlmost all companies today have formulated some sort of mission statement, which usually expresses the values, goals and the core competency of the firm. When two different companies merge, the mission statement can become a problematic issue since values can differ. The case “Managing talent across national borders: the challenges by an international retail group” mainly brings up the question of how to manage talent. It does not say in the case how the differences between two companies were or were not expressed in some sort of mission statement. By forming mission statement and identifying the core competence, some of the problems that occurred due to the differences in managing talent might hade been avoided.

 

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Review, original research paper: Managing talent across national borders: the challenges faced by an international retail group

Related articles:

Bill Clinton and How to Use Convening Power

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References:

Gilley, J.W., Eggland, S.A. (1989), Principles of Human Resource Development, Addison-Wesley Publishing Company Inc, Reading, MA

Bogan, C.E. (1994), Benchmarking Best Practices: Winning through Innovative Adaptation, McGraw-Hill, New York, NY

Browne, J.H. (2000), “Benchmarking HRM practices in healthy work organizations”, American Business Review, Vol. 18 No.2, pp.50-61

Pfeffer, J. (1994), Competitive Advantage through People, Harvard Business School Press, Boston, MA.

 

Electronic source:

 

 


[1] Wild, Wild, Haan, Inernational Business, 3rd Edition, p.77.

[2] Ghosn, C., (2002). “Saving the business without losing the company”, Harvard Business Review, January, pp. 37-45