ang 1 BMP

Winter 1‘JBb

sSJudti Wdiiiiycinent Rtwiow

SMR Forum:

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Managers for Global JTusinesses

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1\T. Mumiy A lica Haller Murray

1‘AM Associutes l¹'AM Associates

The iucreiising giuLul-ization of business pro-duces a neud fur efk;C-iive overseas managers. Amony Japanese ovei-seas managers the iail-ure ratę is quile Iow. while failures amnng American e;\painale managers are quile conunon, What is the reason for this:' Whai can -be dniiu about it ? In tllis paper, ibe uuUhjis review tiie factors lliai make expatriate man-agers successfui ₀ral outline how targeicd traimng prograriis, modeled aher the sys-tematicaml thomugh approaeh of Japanese coiiipaijies, can reduta; the failure ratę and nu-prcve performance. Training in efiectwe-ness and coping shilL not oniy produces siu: cesśful rwerseas lnan-agers, but successfui overseas businesses as walk EJ.

i Pitce, quality, a sAong doi lar. These are ihe reasuns given lor Japan’s awesome penetra-tiuu ot world markets. TheyTe valid on es. Hut there's anotlier factor tliafs fundamental lo the japanese success in becoming a global economic power: their understanding of and response to the needs and opportunities ol foreign markets. Nol by ciiance do Ihey have tbis understanding; theyVe acqnired il through a concerted elf ort to develop a corps uf inteniational rnauagers and tedmiciaus adept at doiug business in alien countries and cultures.

z To datę American companies bave shown Utlle evidence of realiztng liow much ja-pan owes its phenomenal success to high-pertorming International managers. From the Japanese we've been willing to borrow tediniąues such as quality circles and just-in-time assembling, bul we haven’t asked uurselves if there’s a iesson to be leanied from the thorougbness witki which Japanese companies go about eqnipping their expa-łriule persoimel for tbe exacting task of work-mg and living in an alien culture.

cians assigned overseas run a poor second.

4 A renem survey of large inultinational corporations revealed the following; morę than lluee quarters of Ihe eighty U.S. corporations respomimg reported that i (i to 40 per-cent of their personne! assigned overseas had to be recalled or dismissed because of poor performance — most of them people whose performance previous to tire overseas assignmeni had been excellent. Only a quar-ter of the corporations reported a failure ratę helów 10 percent. Of tire thiriy-live Japanese companies responding, however, 86 percenl reported a failure ratę of less than 10 percent; no morę than 14 percent stated their failure ratę was over 10 percent; in no case did it reach 20 percent.¹

s The costs of the high American failure ratę extend beyond Ihe $150,000 to $250,000 per airnum it costs to maintain a U.S. family overseas, Expatriale managers and techni-cians are key people. When a crisis makes it necessary to replace them, company opera-tions are disrupted and a period of lost opportunities and profits ensues. At the sarnę time valuable human assets are permanently lost to the company; even those whose performance prior to an overseas assignment was quite good rarely stay with the company aft er failing as expatriates.

6 in addiiion, it is safe to conciude that the same factors causing failnres also act as a drag on the performance of those who man-age to complete overseas assignments. Typ i -fying this is the remark of an American ongineer who, eiier lluee years in Venezuela, said: "Horę Fm only able lo work a i 'iii per-ceni ot my efleciiveness in the IJ.S.”-

/ ls tbere something that can be done to re-duce this failure ratę, and at Ihe same limę improue tire performance of expatriale per-

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msls ot Faihn e

sin tbe years sińce World War 11 American curpuriitiuns have comjjiled an enviub)u recórd in penetraiing foreign markets and Imilding global husinesses, A large share of the credit for globalizing the scupe of American business bdungs to ii.S ocerseas umn-agers, wlio liave learued Ute ins and outs ol doing business in a worki ot untamiliar cus-imus and markets. If we luok closeły, lmw-ever, at the success ratę of American expa-Iriates compared w i tli Japanese expatriates, we fimi ihat American managers and teclmi-