Leadership competencies and attitudes for success in globalization

Leadership competencies and attitudes for success in globalization Understanding of international interaction is essential for transnational organizations to work effectively in todays global business environment. The level of this understanding is related to possession of international competencies within an organization (Gupta and Govindarajan, 2002). Although the need to develop leaders with adequate competencies has become obvious in recent years (Adler and Bartholomew,1992; Brake et al., 1995; Brake, 1997; Morrison, 2000; This source has not been included in the reference list Bonnstetter, 1999; Suutari, 2002), there is still a significant gap between the international human resource requirements of global strategies and their realization (Adler and Bartholomew, 1992; Engle et al., 2001, Morrison et al., 1999). The process of identifying core competencies usually entails having employees identify core competencies by scanning and assessing company-critical resources, capabilities, and competencies three factors commonly referred to as associated concepts. In the identification process these concepts often become conceptually and empirically merged, something that occurs in strategic management research too, when these associated concepts are defined interchangeably. For example, capabilities and competencies are defined interchangeably by Spanos and Prastacos (2004). Furthermore, diversity and complexity increase in a domestic working environment as business operations become more international. The dynamics, complexity and diversity now characteristic of global environment are diffusing into the domestic environment (Gregersen et al., 1998; Harvey and Buckley, 2002) making increasing demands on management and leadership competencies at all organizational levels. Therefore, increasing under standing of different aspects of globalization and interrelationships of various factors and their changes will help organizations to meet the new challenges brought by globalization, whether their primary operation environment is domestic, international or global. Employees need to learn about culture and cross-cultural communication if they are to work effectively with minorities within their own society or with foreigners encountered at home or abroad (Harris and Moran, 1987, p. 56). The development of global competencies should be based on the global business strategy which determines what kind of global presence is desirable, how many and what types of international or global jobs, projects, task forces, and other types of interactions exist (McCall and Hollenbeck, 2002). Competency development process should start from an analysis of the dynamics of the global business environment and the core competencies, continuing to identifying the profiles of necessary human resources and ending with identification of necessary competencies for specific jobs/functions. Once the specific leader competencies have been identified, the next step is to build bench strength effectively (Brake, 1997; Gregersen et al., 1998). The other assumption is that global leaders have just developed their (general) competencies into a higher (global) level. Bartlett and Ghoshal (1992), and Baruch (2002) argue that there is no such thing as a global manager, or any universal criteria for gl obal managers. Instead, Bartlett and Ghoshal see global management as being a task of a network of specialists including business managers, country managers and functional managers.Yet, they suggest that the top executives are the leaders who manage the complex interactions between the three types of managers, and they must understand the strategic importance of each specialist. The majority of the research on international assignments and positions has been research about expatriates. Some authors have stated explicitly their focus being on global managers/leaders and yet, discuss issues related to the target country such as cultural distance. However, a global leader (or manager) is not necessarily an expatriate, and vice versa. The value of an expatriate assignment as a major developmental experience for those pursuing global career is widely acknowledged. Therefore, and because of scarcity of pure global leadership literature, expatriate literature as well as general leadership literature is relevant also when studying global leaders. Overall, the previous research on global leadership competencies has been dispersed and more synergistic research is needed, together with a more comprehensive theoretical framework, to understand the processes and interactions underlying the development of a global leadership potential (Tiina, 2004). This paper attempts to take a step towards such framework, Secondary data was collected based on the finding of published papers, articles and books perior studeis , the world wide web , existing global leadership and other related literature, these data was reviewd and disscussed to combine findings and suggestions provided in previous literature in a more integrative framework of global leadership competencies and attitudes. The structure of the paper is as follows; The terminology used in the international/global leadership ,literature is reviewed and discussed first and the more integrated framework was described in the chapters that followed. The results identefied 12 competanceie as an assessment and intepret tools to provide an opportunity for experts to reflect on the structure of their company or organisation and to rate the CEO, corporate staff, subsidiary general manager and staff, as well as all employees in general. then indicated whether the competency is essential, use ful or not necessary for the CEO, corporate staff, subsidiary general manager and staff, and all employees, in order for the transformational goal to be realised and to make globalisation work. Litreture review The main outcomes of previous research Recent research supports the idea that there are a limited number of key competencies, over and above the contextual ones, that predict successful behavior in a global environment (Jordan and Cartwright, 1998; Gregersen et al., 1998). As was already mentioned earlier, most of the previous research regarding international competencies has been done on and among expatriates, but much of this research is also relevant when studying global leaders. Harris and Moran (1987, pp. 226-227) review of earlier literature produced nearly 70 dimensions of overseas success of which 21 are given priority as being more important for foreign employment. However, this listing focuses on filling specific expatriate positions, including many practical and contextual items such as adaptability of spouse, promotability, interest in host culture etc. Harris and Moran (1987) focus on cross-cultural interaction and suggest that the main outcomes of cross-cultural training can also be used as selecting criteri a for overseas service. These are empathy, openness, persistence, sensitivity to intercultural factors, respect for others, role flexibility, tolerance of ambiguity, and a two-way communication skill. Srinivas (1995) defines eight components of global mindset which form the base for competencies needed to meet the challenges organizations/individuals face especially when entering a global environment. The components are: curiosity and concern with context, acceptance of complexity and its contradictions, diversity consciousness and sensitivity, seeking opportunity in surprises and uncertainties, faith in organizational processes, focus on continual improvement, extended time perspective, and systems thinking. Rhinesmith (1996) has identified six characteristics of global mindset that lead to global competencies. These are: bigger, broader picture (leading to managing competitiveness), balancing contradictory demands and needs (managing complexity), trust in networked processes, rather than in hierarchical s tructures (managing adaptability), valuing multicultural teamwork and diversity (managing teams), flow with change/seeing change as opportunity (managing uncertainty), and expanding knowledge and skills, being open to surprises (managing learning). In the same line, Rosen (2000) maintains that globally literate leaders possess four global literacies. These include personal, social, business, and cultural literacy. Jordan and Cartwright (1998) maintain that the key to international success lies in a mixture of personality characteristics and managerial competencies. Managerial competencies include relational abilities, cultural sensitivity, linguistic ability, and ability to handle stress. Conner (2000) also identifies a number of skills and capabilities needed by leaders working in a global company, organizing them under six headings: business savvy, ability to use personal influence, global perspective, strong character, ability to motivate people, and entrepreneurial behavior. Mumford et al. (2000) have defined five categories of leadership skills for the changing world. In addition to social judgment skills, social skills, and creative problem solving skills leaders need four types of knowledge: knowledge related to task, business, organization and people. Resources and the process of identifying core competencies usually entails having employees core capabilities by scanning and assessing company resources, capabilities, and competencies ,three factors coming referred to as associated concepts .in the identification process these concepts o ften become conceptually and empirically merged, Something that occurs in strategic management research too. For example, capabilities and competencies are defined by Spanos and Prastcos (2004) and capabilities by Peteraf and Bergen (2003) and Ray et al. (2004), and skill, competence. Other scholars, however, have more usefully distinguished these associated concepts (Branzei and Thornhill, 2006; Savory, 2006; Ljungquist, 2008). Were are the first three items? The fifth item is willingness to exercise these skills. Caligiuri and Di Santo (2001) have approached the desired competencies from a company perspective and identified eight desired developmental dimensions for global leadership programs: ability to transact business in another country, ability to change leadership style based on the situation, knowledge of the companys worldwide business structure, knowledge of professional contacts worldwide, knowledge of international business issues, openness, flexibility, and ethnocentri sm (getting away from it). Spreitzer et al. (1997) focused on finding candidates for those leadership programs, individuals possessing global leadership potential. They have identified 14 dimensions or themes underlying success as an international executive, making a clear distinction between the end-state skills and the ability to learn from experience. Jehad (2009) identified that the core competencies had a significant impact on competitive advantage. Goh (2010) examines how to improve the quality of products and services in the age of globalization reviwing the traditional concepts and the six segma framework, ilustrates how paradigram shifts must affect to achieve real gains in quality. The competencies required for globalisation The above disscussions and further review of relavent litreture is indicated (12) organizational and individual competencies required to make globalisation work have been drawn up (Fig.1). These competencies will be described and developed in this and the following three chapters.these competencies are described into the below table as a finding of such review and also in the dissucssions follows. Attitudes Possesses a global mindset Works as an equal with persons of diverse backgrounds Has a long-term orientation Leadership Facilitates organisational -change Creates learning systems Motivates employees to excellence lnteraction Negotiates and approachesb coflicts in a collaborative mode Manages skillfully the foreign deployment cycle Leads and participates effectively in multicultural teams Culture Understands their own cultural values and assumptions Accurately profiles the organizational and national culture of others Avoids culture mistakes and behaves in an appropriate manner in other countries Fig. 1. Twelve organizational and individual competencies (source: developed by the authors) Studies conducted with companies and individuals have demonstrated that organisations and people can successfully change. Self-initiated change (I want to learn this skill) and professionally facilitated change have both been successful. How change occurs is not well understood, and this report is not intended to answer the question of how organisations and individuals change. Our purpose is to identify the competencies and to suggest strategies for acquiring them. Conceptual model of study: Figure 2 below summarises the 12 external environmental factors, leading to globalisation and the 12 organisational or individual competencies required to succeed in globalisation within the organization. External Forces Economies ofscale New and evolving markets Global sourcing Reduced tariffs/ customs barriers and tax advantages Homogeneous technical standards Loweredglobal transportation costs Increased telecommunication options at reduced costs Trend toward homogeneous demand for products Competition from International Competitors Custome stratey changes fromdomestic-only to global Exchange rate exposure Accelerating rate of technological change GLOBAL organizational competencies Vision Strategy Structure Competencies required to make organization work Attitudes à ¢-  Possesses a global mindset Has the ability to work as equals with persons of diverse background Has a long-term orientation Leadership Facilitates organizational change Creates learning systems Motivates employees to excellence Interaction Negotiates and approaches conflicts in a collaborative mode Manages skillfully the foreign deployment cycle Leads and participates effectively in multicultural teams Culture Understands their own culture values and assumptions Accurately profiles organizational culture and national culture of others Avoids cultural mistakes and behaves in a manner that demonstrates knowledge and respect for the way of conducting business in other countries Fig. 2. Globalisation forces and competencies (source: developed by the authors) Competency 1. Process a global mindset Attitudes are learned and therefore can be unlearned. A global mindset is an attitude: it is not knowledge or information. We learn to be ethnocentric, and we can learn to be global in our perspective. Mindsets Mindset is a word that rarely is used in daily conversation. Websters Encyclopedia Unabridged Dictionary of the English Language, containing over 250 000 entries, does not list it. A smaller Websters dictionary defines mindset as a fixed mental attitude. (Fishers, 2000) excellent book Mindsets: The Role of Culture and Perception in International Relations demonstrates the importance of possessing a global mindset to succeed in the globalisation process. Individuals working in foreign countries share similar experiences in overseas assignments and must not only meet the requirements of their work assignments, but also be able to adjust to unfamiliar attitudes and psychological predispositions. They must function within the expectations of the host culture. In other words, they must work across contrasting mindsets [which] reflect differences in national experience and culture, according to (Fisher, 2000). To date, no comprehensive studies have been conducted on the ways in which contrasting mindsets affect international business relationships and transactions. The education of most managers has provided only hard business skills, such as engineering, finance and strategic planning. Fisher suggests the necessity of providing global managers with additional training in the social sciences, as it is not sufficient to provide a person only with facts and information about unfamiliar cultural practices. Global mindsets Rhinesmith (1996) correctly postulates that a global mindset is a requirement of a global manager who will guide institutions and organizations into the future. He defines a mindset as: a predisposition to see the world in a particular way that sets boundaries and provides explanations for why things are the way they are, while at the same time establishing guidance for ways in which we should behave. In other words, a mindset is a filter through which we look at the world. Rhinesmith states that people with global mindsets approach the world in a number of particular ways. Specifically they: Look for the big picture; that is, they look for multiple possibilities for any event or occurrence-they arent satisfied with the obvious. Understand that the rapidly changing, interdependent world in which we are living is indeed complex. Are process-oriented; in our experience this is the most important dimension, and the one that is most lacking in individuals who are not globally oriented. Consider diversity as a resource and know how to work effectively in multicultural teams. Are not uncomfortable with change or ambiguity. Are open to new experiences. Ethnocentricity vs geocentricity Contrasted to the individual with global mindset is the one who is ethnocentric. Ethnocentricity is defined by the Random House Dictionary as: Belief in the inherent superiority of ones own group and culture; it may be accompanied by feelings of contempt for those others who do not belong; it tends to look down upon those considered as foreign; it views and measures alien cultures and groups in terms of ones own culture. A framework developed to illustrating ethnocentrism (Fig. 3). Not only individuals, but also organisations can be ethnocentric (This source has not been included in the reference list Stephen Weiss and William G. Stripp; 1993). The ethnocentric organizations tend to use home-country personnel in key positions throughout the world, believing they are more intelligent and capable than foreign managers (Harris and Moran, 2003). Attitudes toward themselves and their groups Attitudes toward others See themselves as virtuous and See their standards of value as universal and intrinsically true See themselves as strong Believe outgroup is inferior superior Believe outgroup is weak Distrust outgroups Fig. 3. Framework of ethnocentrism (source: ) In this case, superiority is not equal to nationality, and all groups can contribute to the organisations effectiveness.The culture shock inventory, was designed to measure individual ethnocentrism, or the degree to which individuals perceived their value system to be appropriate for others. Attitude change With globalisation, contact between persons from different cultures increases. What happens when this occurs? Do individuals become more global or more ethnocentric? Following a review of the literature on intergroup contact, This source has not been included in the reference list Amir concluded that the direction of attitude change, following contact with people who are different, depends largely on the conditions under which the contact has taken place He indicates that there are favorable conditions, which reduce prejudice, and unfavorable ones, which may increase prejudice (Kenneth, 1974). The favorable condition of equal status as a factor in reducing prejudice was reported by This source has not been included in the reference list Allport. He pointed out that, for contact between groups to be an element in reducing prejudice, it must be based on equal status contact between majority and minority groups in the pursuit of common goals. Organisations that are globalising must have common goals Competency 2: Works as an equal with persons from diverse backgrounds This section focuses on working women, since the number of women in the workforce worldwide has dramatically increased since 1950. We are fully aware that diversity in the workforces of many countries is also reflected in a significant increase in the numbers of Third and Fourth World immigrants, the physically challenged, senior citizens and others. Generally, the following workforce trends have been identified (Moran and Harris, 2003): By the year 2000, women will comprise just under 50 per cent of the UK workforce. By the year 2000, non-whites will make up 20 per cent of the UK workforce. Greater numbers of immigrants are coming to the United Stares than at any time since World War 1. A greater portion of the US workforce is middle-aged, and the workforce is gradually getting older. The demographics of the workforce in most countries are changing. This is reflected in the development of seminars and workshops on cultural diversity in the United States and other countries. Five years ago these seminars were unheard of, or else, when conducted, they were under the rubric of affirmative action.* What does the note mean? Competency 3. Has a long-term orientation There are many reasons why companies have not been successful in competing in the global marketplace. One of these reasons is shorttermism. Dick Ferry, the president and co-founder of Korn/Ferry, addresses this issue: Corporate America may talk, on an intellectual level, about what itll take to succeed in the twenty-first century, but when it gets right down to decision making, all that matters is the next quarterly earnings report. Thats whats driving much of the system. With that mind-set, everything else becomes secondary to the ability to deliver the next quarterly earnings push-up. Were on a treadmill. Competency 4. Facilitates organisational change This section will cover two main points: what some academics and business people say about organisational change, and (2) how they recommend managing these changes. We present several perspectives, as it is our belief that no one individual has all the answers, strategies or methods to facilitate change. Competency 5. Creates learning systems This source has not been included in the reference list Peter Senge said it best in his book, The Fifth Discipline: The organizations that will truly excel in the future will be the organisations that discover how to tap peoples commitment and capacity to learn at all levels in an organisation. Competency 6. Motivates employees to excellence The pronoun test: An operative word in UK organisations for the past several years is ,empowerment. Our employees are empowered, says an executive from a different Fortune 500 company, this one thriving in turbulent times. Perhaps an important difference between the two organisations may be determined: For six months now Ive been visiting the workplaces of America, administering a simple test. 1 call it the pronoun test. 1 ask front-line workers a few general questions about the company. If the answers 1 get back describe the company in terms like they, or them, 1 know its one kind of company. If the answers are put in terms like we, or us 1 know its a different kind of company. It doesnt much matter whats said about the company. Even a statement like, they aim for high quality here suggests a workplace that hasnt yet made the leap into true high performance. It isnt yet achieving ever higher levels of quality, productivity and service. Only we companies can do this (Rhinesmith, 1993). Competency 7. Negotiates and approaches conflicts in a collaborative mode The material describing this competency is drawn from many excellent sources but primarily from the managing cultural difference: How to negotiate with japans? Managing cultural synergy and developing the global organization (Black et al., 1999) To make globalisation work, we need to negotiate and approach conflicts collaboratively. Skillful international business negotiators know more than, and behave (act) differently from non-skillful negotiators. Competency 8. Manages skillfully the foreign deployment cycle It has been estimated that American corporations and government spend about $50 billion each year in education and training. The goal is to improve the performance of the individual, thus enhancing the operating performance of a company or the government. jay Duffy, manager, employee development, for a division of a large global company, believes training may be a solution if one of the following four situations exists (Hershock, 1993): 1. A gap exists between the skill level and the current position requirement. 2. The tasks of a present position need to be performed differently. 3. The job has changed or will change. 4. Future positions may require different or additional skills. The gap between job requirements and the skill of the employee was demonstrated in research conducted and reported by Kathleen Miller (Conference Board, 1992) among others. Competency 9. Leads and participates effectively in multicultural teams High performance teams, team work, worldwide global product teams and other words expressing similar ideas are commonplace in the management literature today. Stories of teams producing remarkable accomplishments are well known. Well functioning teams can increase productivity and creativity. However, functioning skillfully on a team is a learned skill. The Conference Board addresses the problem: The CEO must be fully committed to globalisation and must actively and persistently drive the globalisation process. Chief executive commitment is more important than international experience and background. It is essential that the CEO understands the issues (e.g. culture, human resources, empowerment) and translates commitment into actions. Words alone will not drive the process. Second, a core team of managers with an international background must be available in the organization before anything can happen. These managers must bring international culture and international experience to energise the globalisation process (Suutari, 2002). The process of building an international team large enough to permeate the entire organisation is long and arduous. It requires years of training, attention to recruiting, career development, and job rotations through foreign assignments. The role of multicultural teams in the globalisation process is well recognised. Competency 10. Understands their own culture, values and assumptions Know thyself Socrates. Global managers from one country have to work and negotiate with their global counterparts regularly. A common requirement is that they must each be able to communicate effectively and work with individuals who have been socialised in a different cultural environment, and whose customs, values, lifestyles, beliefs, management practices and other important aspects of their personal and professional lives are different. A European executive during a personal conversation said, I cant think of any situation in my 25 years of international experience when international business was made easier because people from more than one country were participating. (Fisher, 2000). A global manager must be aware of the many beliefs and values that underlie his or her own countrys business practices, management techniques and strategies. Competency 11. Accurately profiles the organisational culture and national culture of others Corporate culture is the way of life of an organisation the recent studies of many large organizations, they concluded Corporate culture can have a significant impact on a firms long-term economic performance. Corporate culture will probably be an even more important factor in determining the success or failure of firms in the next decade. Corporate cultures that inhibit strong long-term financial performance are not rare; they develop easily, even in firms that are full of reasonable and intelligent people. Although tough to change, corporate cultures can be made more performance-enhancing (Adler, 1992) Competency 12. Avoids cultural mistakes and behaves in a manner that demonstrates knowledge of and respect for other countries Skillful international managers have learned to see the world differently and to understand the way others manage and do business. This implies that there is no single way of doing anything and that no one culture is perfect or complete in all aspects. Successful communication with other cultures means not judging customs, rituals or ways of doing business as ridiculous, or inferior to ones own. A Swedish executive of a large multinational corporation expressed it this way: We Swedes are so content with the quality of our products and the Swedish way, that we forget that 99 per cent of the rest of the world isnt Swedish. (Pritchett, Pound,1992). Implications The major aim of this paper was to review global leadership competency frameworks suggested in previous literature and to build a more integrative competency framework to be used in future research. Some general issues related to global leadership research were discussed first, and the more integrated framework was described in the chapters that followed. Despite the large number of studies carried out on critical success factors for international (in most cases expatriate) assignments there are only very few based on empirical research, attempting to test the validity of different items and the reliability of different measures. Results from previous studies accumulate into a long list of competencies characterized by only minor semantic differences of a much smaller number of key competencies (see also Jordan and Cartwright, 1998). Practically no longitudinal research has been reported that would validate the relevancy of different competencies defined. As a result, there is little agreement among researchers on the definition of global competence, its antecedents or outcomes. From human resource development perspective, this framework may provide the base for planning international training activities where the fundamental questions to be answered is: in what type of competencies development is needed for, knowledge, skills and abilities, or other characteristics? Competencies have been defined with terms describing certain personal traits, behaviors, skills, values, and knowledge, and many existing frameworks are combinations of these. In existing research, different types of dimensions have often been mixed and treated as equals. A certain trait in one framework is replaced with corresponding behavior in another. Generally, selection of relevant competencies has generated much argument since the relevance of competencies is commonly seen to vary with the task and organization involved McBeath (1990), Baruch (2002), Evans et al. (1989). In this paper global leadership competencies are seen as those universal qualities that enable indi