Dr. Farid A. Muna
Chairman
Meirc Training & Consulting

June 2011

To succeed in the next few decades, organizations must become more multicultural in both their business practices and their people's mind-set.

Regardless of their country of origin, more organizations will be hiring and developing multicultural talent in larger numbers in order to build and maintain sustainable global competitive advantages. Failing to do that, they will eventually discover that the "one-size-fits-all" approach to global strategy is unlikely to succeed in the long run - not in today's rapidly-changing economic environments.

Some multinational organizations are handicapped by the lack of diverse and multicultural senior management teams at their home offices: their senior management or their boards of directors consist of executives of the same nationality or the same cultural mind-set. Additionally, many organizations send executives overseas who have the right technical competencies, but often lack the cross-cultural skills to conduct business effectively with other cultures.

McCall and Hollenbeck (2002) list seven competencies that are essential for global work - six of the seven are culture-related skills, the seventh competency is technical or business skills. There is agreement among scholars that success in global business requires a "worldly mind-set" (Mintzberg, 2004), or a "global mind-set" (Javidan et al., 2010), or a healthy dose of "cultural sensitivity" (Muna and Zennie, 2010). However, there are, it seems, organizations who are still not taking seriously cross-cultural skills when sending their executives overseas, thus risking failure for executives who were otherwise very successful "back home".

There are exceptions, of course. Companies with good practice in this area include PepsiCo, Procter & Gamble, General Electric, IBM, Unilever, Reckitt Benckiser, and Shell Oil, to name a few. A quick glance at the resumes of executives at these companies reveals the extent and diversity of their multicultural backgrounds - with rich experience in international assignments or belonging to different cultures and nationalities.

Consider, for instance, PepsiCo's senior management team. Six CEOs report to Indra Nooyi, the Chairman and CEO of PepsiCo (originally Indian): CEO of Beverages Americas (Italian), CEO of Europe (British/Sudanese), CEO of Asia, Middle East & Africa (Palestinian), CEO of Americas Food (American), CEO of Global Nutrition (British-born Pakistani), and CEO of Pepsi Beverages Company (American). The list of names of other PepsiCo executives, which appear on the company's website, reads like a United Nations' telephone directory.

In a Harvard Business Review article, the CEO of Reckitt Benckiser (RB), which employs over 20,000 people and operates in over 60 countries, wrote:

"Now in every country we have people of many nationalities as well as local citizens. Today an Italian is running the UK business, and an American is running the German business. A Dutchman is running the U.S. business, an Indian the Chinese business, a Belgian the Brazilian business, and a Frenchman the Russian business. It is not that you can't advance at RB in your local company. You can. But we also offer unique global mobility and experience to people who want to grow their careers on a world stage." (Becht, 2010)

Identifying and hiring high potential talent is, at best, a non-scientific endeavor and it's still in its infancy. There is no litmus test, a thermometer, or an MRI that can measure leadership potential, for example. We are told that the best predictor of future behavior is past behavior; but this is perhaps an over-simplification, and it certainly is difficult to apply for two good reasons.

First, it is a difficult task to uncover and measure competencies, and it becomes even more difficult if the cultural competency is under consideration. When hiring talent, penetrating and probing questions must be asked about actual, not hypothetical, accomplishments, behavior, and situations. References (other than those supplied by the candidate) should be thoroughly checked. Larry Bossidy (2001), former chairman and CEO of AlliedSignal, wrote in a short but intriguing article titled "The Job No CEO Should Delegate" that when checking references of high caliber candidates (which he did himself, not HR) he focuses on "the candidate's energy, implementation, and accomplishments", he asks questions that "get at the real potential of each candidate." Fernandez-Aroaz and his colleagues (2009) maintain that "Hiring Gets a Failing Grade", they found that half of the global companies they surveyed "relied primarily on the hiring manager's gut feel", with little attention to "careful reference checks".

Jack Welch, former chairman and CEO of General Electric, believes that the key to hiring is: "Listen closely. Get in the candidate's skin. Why a person has left a job or jobs tells you more about them than almost any other piece of data."

Second, strengths and weaknesses in one context may not be the same in a different culture or context. For example, according to Muna and Zennie (2010), for a Western expatriate to be overly self-confident or assertive may well be perceived in some Eastern cultures as "arrogance" or as a sign of "superiority complex"; or, worse yet, it may convey the message, "my way or the highway". Moreover, certain strengths may become weaknesses when the context changes. Morgan McCall (2007) argues persuasively that it is perilous to "play people to their strength". This simplistic view, he explains, ignores that old strengths that served well in the past could become weaknesses in different contexts. He cites the derailment of previously successful executives: Phil Condit who stuck to his strength in engineering when he became president of Boeing. Carly Fiorina's strengths were overused when no longer needed in the new situation at Hewlett-Packard. McCall concludes, "As much as a simpler world of playing to strengths might appeal, when it comes to developing talent neither staying with existing strengths nor simply building on them is sufficient."

Recruitment and development of high-potential talent involves strategic decisions, which require the full attention of the CEO - it is indeed a crucial task that CEOs should not delegate or abdicate. It ensures that succession planning is a high organizational priority, and that the organization has "bench strength" or "talent pools" to utilize when, not if, needed. Additionally, it is essential to link recruitment efforts to strategy - to hiring and developing people whose competencies would generate wealth and value, which in turn contributes to strategic advantages especially in a global environment. In brief, talent is a powerful sustainable competitive advantage, which is not easily copied by competitors.

Finally, Muna and Zennie (2010) state that "... neither convergence nor divergence in the practices of management is the likely outcome of a shrinking world; rather it will be multicultural patterns, skills, and behavior that will count and will lead to success. To use metaphors: the world is becoming smaller but remains round and more competitive, with a colorful mosaic, rather than simply a 'flatter world' ". They add:

"We agree with Friedman (2005) that the world has shrunk to a smaller size. However, we believe that the world will continue to have many arenas, contours and walls, some not so flat. Different parts of the world will continue to have different colors, different feel, different flavors, and even different tastes and odors from the one's 'back home'. Not to mention differences in the economic, religious, political, and governmental spheres. Yes, technology and software have shrunk the world, but the slower-changing software of the mind and mental programs still have significant consequences on organizational and individual behavior."

Only when leaders become more "worldly", more "global", and more "culturally sensitive" would they be able to formulate flexible business strategies - rather than relying on the "one-size-fits-all" approach in this semi-globalized world (Ghemawat, 2011).

The message for organizations is clear: hire and develop multicultural talent for higher future positions; and, simultaneously, start placing more multicultural executives on your boards of directors.

Note

This article is based on Developing Multicultural Leaders, a recent book by Muna and Zennie (2010) that represents a synthesis of the best thinking in international leadership literature. The book weaves in the findings of a recent field research conducted in 12 countries in the Middle East. The research involved in-depth interviews with 310 managers and executives from 129 organizations. The author also draws heavily on his experience as a manager, consultant, and trainer for multinational organizations.

References

Becht, B. (2010), "Building a Company Without Borders", Harvard Business Review, 88, 4, pp. 103-6.

Bossidy, L. (2001), "The Job No CEO Should Delegate", Harvard Business Review, 79, 3, pp. 46-9.

Fernandez-Araoz, C., Groysberg, B. and Nohria, N. (2009), "The Definitive Guide to Recruiting in Good Times and Bad", Harvard Business Review, 87, 5, pp. 74-84.

Friedman, T. (2005), The World is Flat: A Brief History of the Twenty-first Century, New York, Farrar, Straus and Giroux.

Ghemawat, P. (2011), "The Cosmopolitan Corporation", Harvard Business Review, Vol. 89, No. 5, pp. 92-9.

Javidan, M., Teagarden, M. and Bowen, D. (2010), "Making it Overseas", Harvard Business Review, 88, 4, pp.109-13.

McCall, M. W. (2007), "Every Strength a Weakness", a paper given at the Annual Meeting of the Society for Industrial and Organizational Psychology, held in New York City, NY, on April 27, 2007. Available online, accessed 3 December 2010.

McCall, M. W. and Hollenbeck, G. P. (2002), Developing Global Executives: The Lessons of International Experience, Boston, Harvard Business School Press.

Mintzberg, H. (2004), Managers Not MBAs: A look at the Soft Practice of Managing and Management Development, San Francisco, Berrett-Koehler Publishers.

Muna, F. A. and Zennie, Z. A. (2010), Developing Multicultural Leaders: The Journey to Leadership Success, Basingstoke, Palgrave Macmillan.