A CASE IN POINT: GE’S EVOLUTION

Looking at the role of HRM in the context of GE’s evolution elaborates these ideas.
Beginning in the 1980s, GE focused on globalizing its markets by selling existing products
abroad (the international strategy). In the late 1980s, it began globalizing its material sources
to acquire higher-quality inputs for lower prices in the quest to minimize costs (the global
strategy). In the mid-1990s, it began globalizing its intellect by seeking, learning, and
transferring ideas throughout its operations (the transnational strategy).

Each stop along its strategic evolution saw GE reset its HRM philosophy and practices to
make sure it developed the requisite human capital. The key to its international strategy was
staffing people who used GE’s core competencies to build competitive operations in foreign
markets. Local operations lacked the necessary knowledge and skills to implement the
international strategy; hence, GE sent expats to fill the gap. The key to its global strategy
was developing executives who optimized location economics in directing global supply
chains.

Growing linkages among local operations required coordinating the expanding web of
global product relationships; short supplies of the requisite executive talent in many
subsidiaries spurred GE to send expats to fill the gap. Lastly, the key to its transnational
strategy is staffing executives throughout its global operations who develop, transfer, and
engage ideas, irrespective of the business, function, or market source. This goal required
posting different people to differ- ent operations in different countries to develop the
requisite executive outlook and leadership skills; hence, GE posted its best managers, no
matter their nationality, to expat slots.

As you see, an MNE’s strategic evolution resets how it engages international business. Each
stage in GE’s evolution required that HRM align executive selection, development, and
compensation policies with the unique requirements of its strategy. Moreover, as GE’s
strategy evolved, so did its understanding of the role of expatriates. Jeffrey Immelt explains,
“When I first joined General Electric [in 1982], globalization meant training the Americans to
be global thinkers. So, Americans got the expat assignments. We still have many Americans
living around the world, and that’s good, but we shifted our emphasis in the late 1990s to
getting overseas assignments for non-Americans. Now you see non-Americans doing new
jobs, big jobs, important jobs at every level and in every country.” Today, GE has a cadre of
international managers with the expertise to leverage its core competencies in developing
and diffusing ideas around the world.

GE’s success in international business, like that of many other MNEs profiled throughout this
chapter, highlights HRM’s mission: find, staff, compensate, and retain executives with the
qualifications needed to support and sustain the company’s strategy. Done well, HRM
supports higher productivity, stronger competitiveness, and improving profitability. Done
poorly, people problems fan frustrations that undermine firm performance and ruin careers. 

Globalizing Your Career
Companies have been moving people around for centuries, capturing the benefits of putting

the right person into the right job at the right place at the right time at the right pay for the

right stretch. Contemporary market trends, strategic imperatives, and executive performance

standards intensify this task. Hence, professional success requires, in the least, expanding your

global awareness, and, ideally, your experiential knowledge of ways that the world works.

Globalization, by spurring trade, capital, and investment flows, expands the scope of the

hundreds of thousands of existing subsidiaries. Moreover, we see tens of thousands of units

opening in fast-emerging markets. Each unit, established and emerging, requires executives

who can command the competencies to navigate economic complexities, cultural ambiguities,

and political challenges, all the while maximizing the MNE’s global efficiency and optimizing its

local responsiveness. GE’s Jeffrey Immelt says, “A good global company does three things: It’s

a global sales company—meaning it’s number one with customers all over the world, whether

in Chicago or Paris or Tokyo. It’s a global products company, with technologies, factories, and

products made for the world, not just for a single region. And, most important, it’s a global

people company—a company that keeps getting better by capturing global markets and

brains.”

By no means must one immediately pack up, say good- bye, and head abroad. But those who

do, fear not, for there are many benefits to an expatriate assignment. Moreover, this secret is

out: A Gallup World Poll reports that 1.1 billion people, or one-quarter of the earth’s adults,

want to move temporarily to another country to find a higher paying job, while another 630

million people aim to move abroad permanently. Still, even if your career plans anchor you to

your home market, globalizing markets spur you to begin globalizing your mindset.

From Afghanistan to Zimbabwe and all countries in between, effective leadership increasingly

calls for such a global mindset. “You have to have an intuitive sense of how the world works

and how people behave,” says Paul Laudicina, vice president of A. T. Kearney. Observed

Daniel Meiland of Egon Zehender International, an executive search firm, “The world is getting
smaller, and markets are getting bigger. In my more than 25 years in the executive search

profession, we’ve always talked about the global executive, but the need to find managers who

can be effective in many different settings is growing ever more urgent. In addition to looking

for intelligence, specific skills, and technical insights, MNEs are also looking for executives who

are comfortable on the world stage.”

THE EXPATRIATE

MNEs often send people to live and work in another country to run their foreign operations.

Some, such as FedEx and J&J, send only a few. Others, like Royal Dutch Shell and Wipro

Technologies, send many employees abroad. Unfortunately, few standards straightforwardly

stipulate why, when, and where MNEs should use these expatriates, or “expats.” Moreover,

ambiguity extends to the matters of selecting the right expatriates, developing the right pre-

departure programs, designing the right compensation packages, setting the right stretch of

time for the assignments, and determining the right way to reintegrate them into the home

company when they complete their tour of duty.

The consequences of success and failure press MNEs to manage their human resources

proactively. Honeywell, like many, begins nurturing potential expatriates years before they

might head abroad, briefing candidates on their cross-cultural skills and prescribing training

paths that address likely points of culture shock. “We give them a horizon, a perspective, and,

gradually, we tell them they are potentially on an international path,” says the company’s vice

president of HR. “We want them to develop a cross-cultural intellect, what we call strategic

accountability.” To this end, Honeywell might advise employees to network with experienced

expatriates, study another language, or assess where they might struggle while living abroad.

The pace of globalization, particularly for MNEs in emerging economies like India, China, and

Brazil, accelerates preparation—indeed, some managers identify candidates upon hire. Sanjay

Joshi, chief executive of global programs at India’s Wipro Technologies, notes, “A big part of

our recruiting is telling people that they will get a chance to work abroad.” This approach, he
believes, improves the quality of new hires while fortifying the company’s growing cadre of

expatriates.

NEW PLACES AND NEW WAYS

Figure 20.1 lists the top benefits of working abroad. Accomplished expatriates testify to the

merits of the quest, describing how the experience changed their perception of business and

their sense of self. Many note that working abroad pushed them, sometimes nicely, sometimes

harshly, to interpret situations differently. Galina Naumenko, of PwC Russia, says an

international assignment “spurs global networking among employees, gives them an

understanding of different cultures, and gets them thinking about alternative ways of

approaching problems and solving them.” Adds Michael Cannon-Brookes, head of strategy for

IBM’s Growth Markets, “You get very different thinking if you sit in Shanghai or São Paulo or

Dubai than if you sit in New York.”

Working internationally compels employees to develop richer management repertoires.

Consider Joan Pattle, a Microsoft marketing manager who worked at headquarters in Seattle

before accepting a post as product leader in Great Britain. Her U.K. job came with wider

responsibilities, as she explains: “At home, my job was very strictly defined. I basically had to

know everything about managing a database. But when I got to London, I was also in charge of

direct marketing and press relations. I was exposed to a much broader set of experiences.”

Similarly, Laura Anderson, a spokesperson for Intel, explains that an assignment in Hong Kong

improved her sense of the company’s business. In fact, several Asian media relations

encounters opened her eyes. “For me,” she says, “it was a tremendous growth experience.”

NEW PROBLEMS AND NEW STRESSES

Notwithstanding the lure of excitement and rewards, the expatriate lifestyle is not for everyone.

Difficulty adapting, no matter how strong the intent, is the primary cause of nearly half of failed

foreign assignments. Put simply, living and working abroad can be tough. Cultural clashes,

language difficulties, murky business practices, and harsh environments rule out anything
beyond a short-term visit for many executives. Other problems arise when a company asks an

executive to transfer to a second- or third-tier city in a less preferred country. Persuading

someone to move from paradise to the wastelands is a hard sell.

The gap between life at home versus “over there” often fans professional, family, and personal

problems. Many expatriates struggle with foreign cultures. Difficulty understanding and

respecting differences, no matter how mundane, spiritual, or philosophical, often causes

expensive failures. To top it off, international business travel “is perhaps the most dangerous

form of travel. Tourists wouldn’t consider flying into a Colombian war zone for a week, yet folks

from oil, computer, pharmaceutical, agricultural, and telecom MNEs do it regularly.” Once

there, merely frequenting high-profile hotels and restaurants with colleagues puts one into the

crossfire.

COMING HOME

Floating around the world today are so-called “expat lifers.” Moving from assignment to

assignment, whether with the same company or another, they plan never to return “home.”

The majority, however, eventually do—they pack their bags, bid farewell to colleagues, board

the plane, and return to a hero’s welcome. A snap, right? Not so. In many cases, everything but

the hero’s welcome happens.

Repatriation— returning to one’s country of origin—is not necessarily disappointing. Tales of

success confirm that communication with the home unit helps preempt problems. Likewise,

careful career planning makes a big difference when it’s time to head home. Following a four-

year assignment in Tokyo, Bryan Krueger returned to a promotion to president of Baxter

Fenwal North America. When he left for Tokyo, his company had not guaranteed him a

promotion upon his return. While he was away, however, he kept up to date with the goings-on

at headquarters, and now credits his smooth return to this intensive networking. During his stint

in Tokyo, he returned to the United States four to five times a year to see colleagues. As he
explains, “I was definitely proactive. Anyone who is not, does himself a disservice. I made a

conscious effort to stay in touch, and it paid off.”10

Still, not all executives share victory tales. A survey of repatriated executives who successfully

completed their international assignments found that more than a third held temporary posts

three months after returning home. Worse still, nearly 80 percent felt their new job was a

demotion from their foreign assignment. To top it off, more than 60 percent felt they did not

have opportunities to transfer their international expertise to their new job. Some executives

tolerate these outcomes. Others don’t. In 2011, nearly 40 percent left their company within one

year of returning from abroad, while another 25 percent left between the first and second

years.

RISKS AND RETURNS

The choice to work abroad, we see, has a high upside and a steep downside. On balance, the

former usually tips the scale. The allure of an international assignment creates growing

numbers of expat-lifers. While overseas, an expatriate is typically well-paid, has big

responsibilities, and enjoys professional prestige. The adventure of living abroad makes an

international career irresistible to some, effectively creating so-called “global nomads” who

travel from one country to the next. For example, after stints in Singapore and London, a

Morgan Stanley expat in India said, “I still don’t want to go back to the United States. It’s a big

world—lots of things to see.”

Still, the risks of a career detour loom large. MNEs regularly tout a foreign assignment as a

meaningful development experience that prepares managers for broader responsibilities. As

the reasoning goes, it improves skills and expertise, fosters cultural awareness, increases

confidence in overcoming challenges, and enhances creativity through exposure to new ways

of doing things. Until recently, however, the odds were on a neutral or negative career

outcome. As Tom Schiro of Deloitte & Touche observes, “Some MNEs just send somebody

overseas and forget about them for two years.” Then, after returning, the company may be
slow in rewarding a manager’s successful international experience with an expanded leadership

role.

EMERGING STANDARDS

With the expanding scale and scope of globalization come supply shortages of talented

executives. MNEs report difficulty finding skillful candidates, investing more time interviewing

and hiring, and worrying more about rivals poaching their high performers. Despite the global

economic slowdown, skill short- ages are getting worse. Manpower, a multinational human

resource consulting firm, found that 34 percent of employers worldwide struggle to fill slots.

According to the global consultancy McKinsey & Company, (1) only 43 percent of employers in

leading markets such as Brazil, Germany, India, Mexico, Saudi Arabia, Turkey, and the United

States can find enough skilled workers, (2) the world will be short 40 million college-educated

workers in 2020, and (3) “there will be far too few workers with the advanced skills needed to

drive a high productivity economy.” Shortages will amplify the value of a global mindset.

By changing the game, globalization changes performance standards. Increasingly, MNEs

regard international experience as the cornerstone of a high-impact career. Nearly 33 percent

of FTSE 100 companies have a foreign national as CEO, and about 70 percent have had a

foreign assignment. Among the Fortune 100, the

figures clock in at 10 percent and 33 percent, respectively. At Procter & Gamble, 39 of the

company’s top 44 global officers have had a foreign assignment, and 22 were born outside the

United States. Global aware- ness and experience are “ingredient[s] you must have if you

aspire to be a global player in the long term,” says P&G’s HR director. P&G expects its leaders

to be both innovative and worldly; they cannot rise to the top without running operations in a

foreign market and managing a product around the world. Its German rival, Henkel, insists on

the same, requiring executives to live in at least two different countries prior to promotion.

Boyden, an executive search firm, notes that seven of ten clients request international

experience when seeking C-suite executives or board members; of those, roughly half now
expect candidates’ career records to show a few years’ tenure in various countries. Bluntly put,

multinational experience is as essential as multifunctional and multi-product experiences in

developing high-performance executives. Consequently, MNEs post high-potential executives

overseas, giving them the opportunity to step up to the challenge, battle test their skills, and

improve their global mindset.

In summary, aspiring executives increasingly look abroad to move ahead. And, while perhaps

overly hyped, personal ambition, environmental trends, market conditions, and workplace

standards steadily move us toward situations where “the people with the top jobs in large

corporations, even in the United States, will be those who have lived in several cultures and

who can converse in at least two languages. Most CEOs will have had true global exposure,

and their MNEs will be all the stronger for it.”