The most recent DHL Global Connectedness Index, analyzing the state of globalization around the world, suggests that we don’t quite live in a ‘flat’ world. Indeed, in spite of visible global interconnectedness, the actual numbers related to international flows of products and services, capital, information, and people, show that globalization is much more limited than many of us think.
I would argue that this is partly due to the persistent ethnocentric nature of how multinationals are managed and how, by extension, they go about leading cross-border activities. From this standpoint, what is needed for further globalization is a more integrative approach, which would allow for sharing, building on and diffusing local best practices at a global scale. Here individual global leaders should serve as primary actors.
In my recent whitepaper, written for The Center of Global Enterprise, I look into the role of global leadership, diagnose its relevant contextual conditions and relative demands, and give some recommendations for how multinationals can assist their global leaders.
Global leaders as main actors of cross-border expansion
Cross-border business expansion is in need of the global distribution and sharing of knowledge, experiences and best practices. Neither a centralized HQ nor total localization can serve these purposes. Instead, integration, which entails leveraging diversity, identifying important commonalities and multi-directional sharing, seems necessary. Such integration can occur through global mobility, yet, industry surveys suggest that companies struggle with managing and finding enough talents to feed these mobility needs. In other words, if multinationals can’t get enough individuals to physically relocate for work, they need to diffuse the necessary local knowledge and skills in other ways, namely through global leadership.
Contextual conditions and demands of global leaders
In a global context, leaders experience greater levels of complexity when fulfilling their specific tasks, for example as a result of frequent and intense changes in the task environment. This task complexity increases coordination challenges, for example when coordinating new product development across different regulatory regimes and customer groups.
The increased complexity that global leaders face also entails a relational dimension. For example, communication is likely more virtual (e.g., video conference) and asynchronous when leaders can spend less contact time with each respective counterpart given the wide geographical dispersion of their counterparts and task responsibilities. On the other hand, striving for more productive and efficient face-to-face meetings may slow down coordination processes. Leading across non-proximate locations also entails a variety of social frictions, due to lack of common language skills, cultural misunderstandings, stereotypes or other biases that impair effective interaction.
The outlined contextual requirements demand high physical and psychological mobility from global leaders. Physical demands involve, for example, the willingness to adopt a frequent flying life style, similar to that of George Clooney starring as Ryan Bingham, a travelling corporate downsizer in the 2009 movie ‘Up in the Air’. Psychological mobility is about adjusting thought patterns and behaviors to effectively interact with people and adapt to situational demands across cultures. Moreover, apart from cognitive responses to different situations, one needs to adapt affective responses, thus being empathetic towards cultural others.
Recommendations for multinationals
- Build a more diverse pool of global leaders
Given the multitude of contextual requirements, multinationals should be better off when hiring and promoting people with different backgrounds. For example, global leadership positions should not be limited mainly to parent-country nationals or only employees with full corporate language proficiency. Moreover, staff diversity should be considered not only at top-level positions, but also at lower levels. International staffing initiatives should go beyond traditional expatriation, by complementing it with inpatriates or self-initiated expats. Finally, multinationals are advised to tap into the potential of bicultural or multicultural individuals.
- Develop necessary competencies
Within the myriad of global leadership competencies, what we can clearly argue is that these competencies should entail (1) both other-oriented and self-oriented elements, and (2) a combination of metacognitive, cognitive, affective, motivational, and behavioral facets. In essence, a great deal of global competencies can be developed through international experience itself. Specifically, global rotations of potential leadership talent could be part of career advancement pathways, therefore multinationals would be well advised to spend more efforts on systematic repatriation and career-planning. Cross-cultural training, mentoring and language proficiency training are good tools to grow one’s cultural and broader contextual repertoire.
- Create belongingness and connectedness
Diversity becomes especially difficult to manage when we fixate on differences. As per social identity theory, the ‘us’ vs ‘them’ categorization leverages intergroup conflicts. Thereof, multinationals should explicitly strive to create common ground, which would go beyond national or ethnical identities. A common corporate culture might serve as a good binding force here. First of all, multinationals might consider employee-company culture fit in the hiring process, whereas standardized induction programs, as well as accompanying coaching and mentoring sessions are additional tools for socialization. Moreover, the creation of multiple points of contact across dispersed organizational units more broadly is another powerful tool of making different people connect. Finally, a common corporate language can also facilitate an overarching identity.
- Educate about globalization
There is compelling evidence that individuals, no matter at which hierarchical level in the organization, continue to overestimate how global the world is – while also underestimating the scope of cultural differences. Such education about globalization can occur though available data (e.g., the DHL Global Connectedness Index) and experience-based as well as formal sharing of knowledge and best practices.