HBR asked executives from Michelin, Telefónica, Hitachi, and Honeywell to share their experiences managing global organizations. Below, Luc Minguet describes how the tire maker trains managers to embrace cultural understanding and flexibility. Eduardo Caride explores the benefits of moving managers across borders. Takeo Yamaguchi details the conglomerate’s efforts to create standardized HR practices across 948 companies. And Shane Tedjarati discusses how the industrial powerhouse is shifting its strategy toward new regions, such as China, India, Vietnam, and Indonesia.
Creating a Culturally Sensitive Corporation
Profile: Luc Minguet is the head of group purchasing at Michelin, a global tire company based in France. From 2002 to 2007 he was the COO of the group’s U.S. truck business unit.

I didn’t expect to have difficulties adjusting to the United States when I moved there to become the COO of Michelin’s U.S. truck business. Through my work in various international corporations, I had lived in the United Kingdom for seven years, in the Netherlands for two years, in the United States for one year, and in Spain for three. Besides, Michelin has a strong culture, the company’s processes are much the same wherever you work, and everyone uses the same (often French) technical terms.

But as I discovered, it’s precisely when you expect to have no problems that you end up having them. After just a couple of months, the HR head took me aside to suggest that I needed to show more sensitivity to U.S. cultural norms. As an American who had spent a lot of time in France, he understood that the two cultures differ sharply in their approaches to interacting with and managing people, and he saw that those differences were causing misunderstandings between my team and me.

Take the way I gave feedback. In France, we focus on identifying what’s wrong with someone’s performance. It’s considered unnecessary to mention what’s right. What’s good is taken as a given. A French employee knows this and reacts accordingly. But for a U.S. employee, as I discovered, it is devastating, because Americans tend to sugarcoat one negative with a lot of positives.

French managers get their wires crossed the other way. When they get what sounds like glowing feedback from an American boss, they think they’re superstars. Of course, when they don’t get the big pay raise they expected after the great review, they’re bitterly disappointed!

With the help of an executive coach who specializes in cultural issues, I was quickly able to make a few adjustments and communicate more clearly with my team about my management approach and our cultural differences. Once my team members and I had a better sense of where we were all coming from, we got along just fine and were very successful. I think we ended up with the best of both cultures: I became less intimidating, and my American colleagues became more open to criticism.

Today we train managers across the global organization to embrace that kind of cultural understanding and flexibility. I’m currently heading projects in Asia in which managers from France and many other countries are working with local employees, and I’m using the same kind of training to sensitize both groups of managers to potential culture clashes. It’s especially important to do this in cultures where people are hesitant to voice disagreement.

Of course, we’ve always done some culture training, but we generally have focused more on people relocating to obviously different cultures than on the locals. And we’ve tended to underestimate differences with the countries that feel more familiar; for instance, we did not routinely prepare executives moving between America and Europe. I have also learned that it’s important to include the expatriate’s spouse or partner, because if that person has problems adjusting to the new culture, it will affect the manager.

Managing across cultures doesn’t stop with a training program, of course. It’s a mind-set, something you have to practice every day, especially in a global company, such as Michelin, that encourages and promotes cultural diversity. When meeting new colleagues from different countries, I’m always careful to say, “Here’s how I give feedback in my culture. How does it work in yours?” It’s actually a good icebreaker, and listening to others is a sign of respect. People like to talk about their own cultures, and with the talking comes understanding and connection.

My experience in the U.S. made me much more careful about paving the way for Michelin’s move into Mexico, which I led from the United States. Since Mexico is a neighbor to and a major trading partner with the U.S., you’d think that an American operation would have no problems anticipating cultural differences. But, fresh from my own difficulties, I took no chances. I insisted that our U.S. managers and our new Mexican managers do some cultural training together. People loved it. The shared experience created bonds among them—and successful businesses.

Diversifying Talent to Suit the Market
Profile: Eduardo Caride is the regional director for Spanish-speaking countries in Latin America at Telefónica, the Madrid-based fixed and mobile telephony company.

Telefónica is still a very young multinational: Even though we’ve been investing in companies and partnerships outside Spain since 1990, only in 2000 did we start to purchase full ownership stakes, with the goal of becoming a truly global business. We now operate in 14 Latin American countries, six European ones, and China. As a result, we’ve begun to think much more deeply about the portability of our talent and the diversity of our leadership teams.

We see several benefits to moving managers across borders. The first is cross-fertilization: People can transfer the lessons they’ve learned—the most successful processes and strategies—from one country to another. The second is relationships: When you’ve worked with people in different markets, it’s easier to pick up the phone and ask for help solving a problem. As an Argentine who spent two years in Telefónica’s Miami office and four years at our headquarters in Spain before returning to Argentina, I can tell you it helps to have been on both sides of the world. The third benefit is change management: Outsiders can help break the natural tendency of local employees to resist new ideas and practices.

Early on, the trend was to export Spanish managers abroad. Now, the streets run both ways. On our executive committee, we currently have people from Argentina, Brazil, Ireland, England, and Germany. On my business development team, I have four Argentines, one Frenchman, one Brit, and five Spaniards.

I also manage eight country CEOs and one subregion CEO, each with his or her own executive committee. Within those teams we’ve found that it’s best to let functional roles drive the mix of foreign versus local talent. For example, the person responsible for selling to large corporate customers needs to be known in the market and have well-established relationships. The same goes for the people overseeing regulatory affairs and sometimes PR (though we often find that it’s helpful to have a Spaniard in the latter role, because politicians and journalists prefer to talk to the head office). For more technical roles, such as IT, executives can easily be transplanted from one country to another. The experience of having already developed a new 3G or 4G network is much more important than local knowledge.

Some executives have an easier time than others moving between markets, of course. With a few people who have come to Latin America from Telefónica’s European businesses, we joke that it’s like Dances with Wolves: They’ve gone native. And we’ve exported several people from our region not only to headquarters in Spain but also to places like the Czech Republic and Slovakia, and many have stayed and excelled. But not everyone is portable. I’ve learned that the biggest predictor of success is the person’s attitude toward learning: Is he or she willing to listen and understand rather than impose personal views? Those skills help ease any of the doubts new colleagues or employees might have.

Telefónica has its own corporate university, where management education providers, such as IESE and Oxford Leadership Academy, teach global best practices to more than 1,000 employees per year, and Telefónica also sponsors local courses and seminars. But the best managers recognize that you can’t homogenize everything. For example, retail sales in Guatemala and Nicaragua involve standing in a market with a megaphone shouting about the benefits of Movistar, one of our mobile brands. That’s different from working in a shop on the nicest street in Buenos Aires showing a customer the apps on a new smartphone. So employees in different markets—even those within Spanish-speaking Latin America—need different skills and coaching.

Telefónica’s growth depends on the ability of leaders to embrace this variety, to move fluidly between markets, and to recognize when it’s their job to change the business and when they must adapt to it.

Standardizing HR Practices Around the World
Profile: Takeo Yamaguchi is the corporate officer for human capital at Hitachi, a Tokyo-based conglomerate with operations worldwide.

Three years ago, if you’d asked how many senior managers worked at Hitachi, or how many employees we had in the United States or India, my colleagues and I wouldn’t have been able to give you an answer. We knew that our worldwide head count was about 320,000, and we had snapshots of information from the 948 companies under our corporate umbrella. But we had no systematic way of tracking employees, evaluating their performance, or identifying future leaders.

Today we do.

I’d been working in one of our U.S. businesses for six and a half years when our CEO called me back to Japan to help him and other leaders embark on a companywide strategic and structural change initiative. The aim was to streamline our businesses into six market-driven groups with shared services and processes, creating “one Hitachi”—a global conglomerate able to serve customers (and beat competitors) around the world. My task, as the newly appointed head of global HR, was to position us to achieve that goal by overhauling and improving our talent management practices.

Our first step was to build a global HR database, capturing basic information—such as name, gender, function, title, pay grade, and performance history—for all our employees worldwide. Some people thought it was impossible because of Hitachi’s size and complexity. How could we put so many businesses on the same platform? But there are now 250,000 people in the system, including 50,000 executives mapped to managerial levels, and we expect to complete the project by 2015.

Armed with this information, we’ll begin to standardize grading and performance management across the businesses so that a manager at company A will be reviewed and compensated the same way as a manager at company B in a comparable industry and region. At the same time, we intend to move away from the Japanese tradition of seniority pay and promotion toward a system in which advancement is based on results. We want to set clear organizational goals that cascade down to individual goals.

The database and the grading will help us give leaders feedback on their teams’ strengths and weaknesses and create benchmarks to improve performance. They also will allow us to gauge our competitiveness as an employer on metrics such as compensation and engagement. In fact, we’ve already completed our first global employee engagement survey, with 140,000 people participating; we’ll do it again this year and compare the year-on-year results.

Another critical initiative is our global leadership development program, which we rolled out in 2012. We’ve asked the CEOs and heads of HR for each market group to identify up-and-coming executives whom they see as the future leaders of Hitachi’s 30 most important businesses. They were told to imagine the market five years from now, to write down the experience and skill sets those CEOs might need, and to select managers who, with the right training and assignments, could fit the bill. We now have a list of more than 400 high potentials worldwide, whom we’ll target for development.

None of this has been easy, of course. It’s an enormous undertaking, with significant challenges. Each of our businesses, and their respective HR departments, had been accustomed to a great deal of autonomy, so the initial reaction from them was pushback and resistance: “Why are we doing this? Why do we have to standardize?”

“I found new allies among our regional HR leaders in China, India, and the United States.” –Takeo Yamaguchi

Even at headquarters, as I tried to set this new direction with a Japanese HR team that was in place before I arrived, I felt very alone. But then I brought in allies, from within and outside Hitachi, including six Americans. I found new allies among our regional HR leaders in China, India, and the United States. I consulted the right advisers—Mercer, Deloitte, Towers Watson, Egon Zehnder—and enlisted the right technology partner. And together we’ve begun to convince the local leaders that we’re doing the right thing.

The company itself can’t be one Hitachi, with effective cooperation between businesses and market groups, if the HR function isn’t aligned.

Shifting the Focus to Emerging Markets
Profile: Shane Tedjarati is the president and CEO, global high-growth regions, at Honeywell. He is based in Shanghai.

A little over a decade ago, Honeywell’s CEO, David Cote, embarked on a major transformation of the company. One of the big holes he identified in its strategy was emerging markets. Although Honeywell had sold industrial products and services in the United States and Europe for more than a century, it was not capitalizing on growth in other regions, notably China and India.

Cote wanted to change that, so he invited me to join the company as one of his direct reports. This sent a clear message: Globalization would be a strategic priority for Honeywell going forward. I have yet to see a company succeed in emerging markets when the executive leading the charge reports to someone other than the CEO.

He asked me to focus first on China, believing that if we succeeded there we’d have a better chance of doing so elsewhere. He gave me an open ticket to work with the board, senior executives, and their teams. To help them understand the importance of China, I didn’t just show a set of pretty slides; I articulated a strategy that spoke to our particular businesses and culture.

One of the first pitches I made to my colleagues was titled “The Hungry Chinese Entrepreneur.” It was a story about five people who had built $40 million to $50 million companies in China by developing products that competed with Honeywell’s. Each business was small, but their combined force was like the Red Army’s march. That shocked the top team, and the four business group leaders asked me to engage with their senior staff. The globalization conversation had begun.

Everyone could see that Honeywell had only salespeople in China—not strategists, marketers, or business owners. That’s why we hadn’t even been able to estimate the market’s size properly. The heads of one unit asked if I could find them a general manager in China, and others soon followed suit. One by one, we hired about 150 managers in China and started to develop products—the first time Honeywell had ever done so outside the United States or Europe. We called the strategy East for East.

To ensure that we would be not only a local player but also a local competitor, we benchmarked ourselves against Chinese rivals, using a 100-question self-assessment that allows us to evaluate our performance on every aspect of our businesses. Cote personally reviews this report twice a year.

In 2008, we decided that India should be the next priority; Honeywell had a strong engineering presence there, but our local businesses were tiny. We employed the East for East strategy, but with some tweaks. For instance, the Indians teamed up with their Chinese counterparts to develop inexpensive products for the local market. Business soon took off there, too; by 2011, China and India together contributed 30% of Honeywell’s growth.

We couldn’t devote the same resources to smaller emerging markets, so I came up with a model for countries such as Vietnam and Indonesia. We created a three- to five-person team to represent our businesses in each country: a senior leader, a government relations expert (essential in developing countries), a marketing executive, and one or two others to help execute. When this approach was successful in Vietnam, we deployed it around the world in 2012. We call these markets “high-growth regions” instead of emerging markets because they now account for more than half of Honeywell’s total growth.

“We see China as ground zero for our globalization efforts.” –Shane Tedjarati

Most country managers come from within the company. Although I was brought in from the outside, I want the next generation of global leaders to emerge from Honeywell’s fabric.

Slowly but surely, the company’s center of gravity is shifting. China is our largest market outside the United States, and we see it as ground zero for our globalization efforts. That’s why we’ve decided to create all our corporate capabilities there, from innovation to after-sales service to product development. China will serve as the globalization platform for all our other markets outside the United States and Europe, which is why I am based in Shanghai.

David Cote often says that it isn’t the fittest that survive; it’s the most flexible. At Honeywell we are trying to create a lot of flexibility so that our globalization efforts represent not a series of revolutions but a constant, and successful, evolution.

 

Republished from Harvard Business Review. For more, visit HBR.org.