Managing the Global Workforce
As communications and information technologies continue to advance to better meet the needs of consumers, an increasing number of organizations are looking to foreign shores not only to increase their market share but to help them gain or maintain a competitive advantage. Lower labor and production costs in other countries make this an enticing alternative to domestic operations. However, globalization of an organization has both advantages and disadvantages, and these must be weighed in a cost/benefit tradeoff analysis to determine whether or not the decision to offshore some of the organization's operations makes sense. In addition, it is critical that the right management team be selected to lead these activities, including both expatriate managers who deal with local concerns and processes in the host country and global managers who see and leverage the bigger picture across national lines. Care must also be taken to consider the impact of offshoring on customer satisfaction and to manage local operations in a way that minimizes any negative impact.
Keywords: Expatriate; Global Manager; Globalization; Management; Offshoring; Outsourcing; Synergy; Culture
International Business: Managing the Global Workforce
As the Information Age progresses and new and better technologies become available, in many ways the world truly is becoming a global village. From a business standpoint, this opens up a wealth of possibilities for making goods cheaper, offering around the clock customer service, or reaching synergy in solving new problems by allowing teams comprised of members from across the planet to work in tandem to reach solutions. Not too long ago, this would have been a much more onerous task. Meetings between team members in different countries required long distance travel, jet lag, and loss of productive time while key personnel flew around the world. Today, however, employees in many organizations think nothing of sitting at their own desks or in the corporate conference room and talking to someone in another country by audio teleconference or satellite video hookup. Similarly, documents to support long distance conversations can be exchanged over secure networks almost instantaneously, further reducing the need for costly and exhausting long distance travel.
Teleconferencing is not the only high tech business tool that makes globalization feasible. The e-mail sent to a colleague in the building across the street can travel just as easily to a facility in another country. International transport of goods and products is also much faster and cost-effective than it was in the past. In addition, an increasing number of businesses today provide services or handle information rather than tangible products. These commodities often do not require physical transport, but can be transferred electronically. As a result, more and more businesses are finding it easy to serve a multinational client base and to coordinate work done between branches or operations in different countries.
There is another reason that globalization can be an attractive idea: It is often possible to get work done in countries with lower labor or production costs, thereby making the firm more competitive in the marketplace. For example, whereas the hourly cost of a call center employee in the US may be $10, a call center employee in India may get paid only $1.20 an hour. Similarly, the hourly rate of production workers varies widely, with those in Mexico paid the equivalent of $2.38 per hour while their counterparts in Germany are being paid $25.08.
By taking a global perspective, the savvy organization has the opportunity to increase its market share and reduce its costs, an extremely attractive possibility. However, the opportunities offered by globalization are not unmixed blessings. From a management point of view, the internationally dispersed workforce is more difficult to manage. When branches or operations of the organization are located in different countries, it is difficult to do management by walking around – the practice in which top management of the organization get out of the office and talk directly to their employees. This situation reduces communication flow within the organization, and can have potentially disastrous consequences. Offshore operations do not run themselves; as good as telecommunications are, they are still no substitute for face-to-face encounters.
Another obvious problem with the globalization of the workforce is the language barrier. If the countries in which the various branches or operations of the organization are physically located do not all speak the same language, there will be a need for multilingual employees. Although effective communication can occur between the employees sharing a common language, those who only speak a single language will need to have to have their communication filtered through someone else. Not only can this be an added expense, but the nuances of meaning in the two languages can be literally lost in translation.
Language barriers, however, are only one reason that international communication is difficult. In addition, differences between cultures – the basic shared assumptions, beliefs, norms, and values held by a group of people – can cause people to misunderstand each other. Cultural differences have a great impact not only on how one can best manage employees in other countries, but even on how well expatriate managers – those who are not citizens of the countries in which they are working – adapt to their new environment. Psychologically, expatriates often experience symptoms of culture shock including homesickness, irritability, hostility toward local nationals, and ineffectiveness at work approximately four to six months after moving to the new country.
These cultural differences cut both ways. The expatriate manager needs to understand the culture of the new country in which s/he is working in order to understand how best to manage the employees working in that branch or operation. In addition, differences in political and economic systems as well as legal and industrial relations concerns can have significant impact on the way the organization is allowed to function.
Legal issues and requirements regarding employer/employee relations differ from country to country, a fact of which the expatriate manager needs to be well aware. In France, for example, employees are legally allowed to work up to a restricted maximum number of hours per week. On the other hand, the ability of the employer to fire employees in France is severely restricted. A manager that does not understand or ignores these rules will not only run afoul of local culture, but the local legal system as well. Similarly, many European countries utilize formal work councils elected by the workers rather than labor unions or employee/management teams to negotiate issues between workers and management. These councils regularly meet with management to discuss policies affecting workers. A manager that does not understand the importance of these groups will soon run into difficulty on the job. In addition, organizations in European Union (EU) countries are required to “inform and consult” employees on an on-going basis about various actions that affect employees. Other issues such as minimum wage, maximum work hours per week and minimum number of holidays can also vary from country to country.
Although people may be people the world over, the differences in their culture and practices makes managing the international organization a more complicated process than managing an organization that is completely located within one country. It is important for managers to understand that these cultural differences are real and to take them into account when determining the best way to deal with employees. In addition, such differences are also important for top level management to consider when deciding whether or not to make the business international. Although labor may be cheaper abroad, high turnover, customer dissatisfaction, or restrictive local regulations are just some of the factors that can wipe out any potential advantage and make the move untenable. A careful cost/benefit tradeoff analysis needs to be done before making any such decision.
The literature widely agrees that one of the keys to success in the global marketplace is an effective international management capability. Although it may be tempting to apply the management styles, practices, and procedures that are successful in the home country to the host country, offshored facilities often require a different approach that takes into account local culture and laws. To be successful on a global scale, organizational management must break out of parochial stereotypes and think globally. This requires a willingness and ability to share information, knowledge, and experience throughout the organization and the ability to balance the demands and priorities of the organization, functions, and country as they emerge.
Managing multinational organizations or organizations that have expanded or outsourced functions to offshore locations can be a complicated process. Even though the advances in high...
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