Presenters:Presenters:Nakiye Boyacigiller, SabancNakiye Boyacigiller, Sabancıı University UniversitySchon Beechler, Columbia University, USASchon Beechler, Columbia University, USAAdditional Team Members:Additional Team Members:Orly Levy, Tel Aviv UniversityOrly Levy, Tel Aviv UniversitySully Taylor, Portland State University, USASully Taylor, Portland State University, USA

Sponsored by NSF, SU Graduate School of Sponsored by NSF, SU Graduate School of Management and EDUManagement and EDU

Global Mindset: People and Global Mindset: People and Culture as the Key to Culture as the Key to Competitiveness in Global Competitiveness in Global OrganizationsOrganizations

SabancSabancı Unı UniversityiversityOctober 5, 2004October 5, 2004

Workshop objectivesWorkshop objectives

Explore how human resource Explore how human resource management and organization culture management and organization culture affect the competitiveness of MNCsaffect the competitiveness of MNCs

Share results from a major NSF Share results from a major NSF sponsored study of MNCs in 12 different sponsored study of MNCs in 12 different countries conducted by the workshop countries conducted by the workshop leaders and their colleagues Sully Taylor leaders and their colleagues Sully Taylor and Orly Levy.and Orly Levy.

Discuss what it means to have a global Discuss what it means to have a global perspective in today’s competitive perspective in today’s competitive environmentenvironment

We hope that this We hope that this workshop will…workshop will… Help you determine the ways in which you can Help you determine the ways in which you can

mobilize HR, organizational culture and global mobilize HR, organizational culture and global levers to increase your firms’ global levers to increase your firms’ global performance. performance.

Strengthen the dialogue among HR and line Strengthen the dialogue among HR and line managers on the role of the human organization managers on the role of the human organization in achieving strong global performance.in achieving strong global performance.

The paradoxes of the global business environment

- Globalization - Localization

- Efficiency - Responsiveness

- Centralization - Decentralization

- Competitiveness - Alliances

- Differentiation - Integration

- Control - Change

- Hierarchy - Network

- Analysis - Intuition

- Function - Geography

The growing complexity of the The growing complexity of the global business environment global business environment has…has… Highlighted the inadequacy of structural solutionsHighlighted the inadequacy of structural solutions Increased the importance of the human dimension of Increased the importance of the human dimension of

organizationsorganizations Requires inherent complexity and flexibility of the human Requires inherent complexity and flexibility of the human

organization organization

Organizational Organizational Competitiveness Project Competitiveness Project Research StudyResearch Study

The Organizational Competitiveness project The Organizational Competitiveness project was designed to study the roles of the human was designed to study the roles of the human organization (organizational culture and organization (organizational culture and human resource management) in creating human resource management) in creating and sustaining global organizational and sustaining global organizational competitiveness.competitiveness.

How important do you think the following are for global organizational competitiveness?• Adaptable organizational culture

• Clear and strong mission

• Performance based HR focus

• Global mindset

• Ability to work across boundaries

• Talent is rewarded, regardless of nationality

How would you describe your company?

Adaptable organizational culture:Rigid-------------------------Very Adaptable

Sense of mission:None----------------------------Clear & strong

Human Resource Management Policies:Cost focus--------------------Performance focus

Global mindset:None ---------------------------A lot

Ability to work across boundaries:None---------------------------Very easy

Talent is rewarded, regardless of nationality:Not true -----------------------------Absolutely!

Premise of the Project: Premise of the Project: Organization Culture and HRM Are Organization Culture and HRM Are Key Drivers of Global Key Drivers of Global Organizational PerformanceOrganizational Performance

InternationalHRM System

GlobalOrganizationalPerformance

OrganizationCulture

Research MethodologyResearch Methodology

SampleSample– 12 MNCs from US, Japan, Israel, UK, 12 MNCs from US, Japan, Israel, UK,

Chile, Mexico, Australia Chile, Mexico, Australia MethodMethod

– One-two hour structured interviews at One-two hour structured interviews at HQs and at least 2 overseas affiliates HQs and at least 2 overseas affiliates (n=37 locations) with 3-5 senior line and (n=37 locations) with 3-5 senior line and HR executives in the US, Latin America, HR executives in the US, Latin America, Europe and Asia-Pacific (n=226)Europe and Asia-Pacific (n=226)

– Questionnaire survey from at least 50 Questionnaire survey from at least 50 respondents per location (n=4000 plus)respondents per location (n=4000 plus)

StrengthsStrengths– Multi-method; integrative Multi-method; integrative &&

comprehensivecomprehensive

.

What we have learned from What we have learned from our research?our research?

Organizational CultureOrganizational Culture

Organization culture is a system of Organization culture is a system of shared values (that define what is shared values (that define what is important) and norms that define important) and norms that define appropriate attitudes and behaviors for appropriate attitudes and behaviors for organizational members (how to feel organizational members (how to feel and behave).and behave).

O’Reilly & Chatman, 1996: 160. O’Reilly & Chatman, 1996: 160.

Organization Organization CCultureulture

Culture is a source of competitive Culture is a source of competitive advantage!!advantage!!

Organizational culture is a Organizational culture is a particularly effective and flexible particularly effective and flexible integration, coordination and integration, coordination and control mechanism in the highly control mechanism in the highly complex, interdependent and complex, interdependent and ambiguous global environment!ambiguous global environment!

Unfortunately, studies of Unfortunately, studies of organizational culture are rare in organizational culture are rare in the international context!the international context!

Denison’s Model of Denison’s Model of Organizational CultureOrganizational Culture

Flexible Stable

Adaptability Mission

Involvement Consistency

External Focus

Internal Focus

Involvement: Building human Involvement: Building human capability, ownership, and capability, ownership, and responsibilityresponsibility– EmpowermentEmpowerment

Individuals have the authority, initiative, and Individuals have the authority, initiative, and ability to manage their own work. This creates a ability to manage their own work. This creates a sense of ownership and responsibility toward the sense of ownership and responsibility toward the organization.organization.

– Team OrientationTeam Orientation Value is placed on working cooperatively toward Value is placed on working cooperatively toward

common goals to which all employees feel common goals to which all employees feel mutually accountable. The organization relies on mutually accountable. The organization relies on team effort to get work done.team effort to get work done.

– Capability DevelopmentCapability Development The organization continually invests in the The organization continually invests in the

development of employees’ skills in order to stay development of employees’ skills in order to stay competitive and meet on-going business needs.competitive and meet on-going business needs.

Consistency: Defining the Consistency: Defining the values and systems that are values and systems that are the basis of a strong culturethe basis of a strong culture

– Core valuesCore values Members of the organization share a set of Members of the organization share a set of

values which create a strong sense of identity values which create a strong sense of identity and a clear set of expectations.and a clear set of expectations.

– AgreementAgreement The organization is able to reach agreement on The organization is able to reach agreement on

critical issues. This includes the underlying level critical issues. This includes the underlying level of agreement and the ability to reconcile of agreement and the ability to reconcile differences when they occur.differences when they occur.

– Coordination and IntegrationCoordination and Integration Different functions and units of the organization Different functions and units of the organization

are able to work together well to achieve are able to work together well to achieve common goals. Organizational boundaries do not common goals. Organizational boundaries do not interfere with getting work done.interfere with getting work done.

Adaptability: translating the Adaptability: translating the demands of the business demands of the business environment into action.environment into action.

– Creating changeCreating change The organization is able to create adaptive The organization is able to create adaptive

change. The organization is able to read the change. The organization is able to read the business environment, quickly react to current business environment, quickly react to current changes, and anticipate future changes.changes, and anticipate future changes.

– Customer focusCustomer focus The organization understands and reacts to the The organization understands and reacts to the

customer, and anticipates their future needs. It customer, and anticipates their future needs. It reflects the degree to which the organization is reflects the degree to which the organization is driven by a concern to satisfy the customer.driven by a concern to satisfy the customer.

– Organizational learningOrganizational learning The organization receives, translates, and The organization receives, translates, and

interprets signals from the environment into interprets signals from the environment into opportunities for encouraging innovation, gaining opportunities for encouraging innovation, gaining knowledge, and developing capabilities.knowledge, and developing capabilities.

Mission: Defining a meaningful Mission: Defining a meaningful long-term direction for the long-term direction for the organization.organization.

– VisionVision The organization has a shared view of a desired future The organization has a shared view of a desired future

state. It embodies core values and captures the hearts state. It embodies core values and captures the hearts and minds of the organization, while providing guidance and minds of the organization, while providing guidance and direction.and direction.

– Strategic Direction and IntentStrategic Direction and Intent The organization’s plan to “make their mark” in their The organization’s plan to “make their mark” in their

industry. Clear strategic intentions convey the industry. Clear strategic intentions convey the organization’s purpose and make it clear how everyone organization’s purpose and make it clear how everyone can contribute.can contribute.

– Goals and ObjectivesGoals and Objectives A clear set of goals and objectives can be linked to the A clear set of goals and objectives can be linked to the

mission, vision, and strategy, and provide everyone a mission, vision, and strategy, and provide everyone a clear direction in their work.clear direction in their work.

Key learnings regarding Key learnings regarding cultureculture

Companies with organizational cultures that Companies with organizational cultures that are characterized by clear, compelling, and are characterized by clear, compelling, and a well-understood mission have higher a well-understood mission have higher levels of organizational performance.levels of organizational performance.

Companies with organizational cultures that Companies with organizational cultures that value adaptability and flexibility have higher value adaptability and flexibility have higher levels of organizational performance.levels of organizational performance.

Companies with organizational cultures that Companies with organizational cultures that are high on consistency, DO NOT HAVE are high on consistency, DO NOT HAVE higher levels of organizational performance.higher levels of organizational performance.

Companies with organizational cultures that Companies with organizational cultures that are high on involvement have higher levels are high on involvement have higher levels of organizational performance. of organizational performance.

HR: High Performance Work HR: High Performance Work Practices Practices

Research in U.S. organizations has Research in U.S. organizations has shown that HPWP are related to shown that HPWP are related to higher levels of organizational higher levels of organizational performance. performance.

– Careful selectionCareful selection– Commitment to long-term employment Commitment to long-term employment

relationshipsrelationships– Emphasis on individual Emphasis on individual and and team team

performanceperformance– High investment in employee High investment in employee

developmentdevelopment– Low levels of status differentiation Low levels of status differentiation – Empowerment and decentralizationEmpowerment and decentralization– Clear job expectations and Clear job expectations and

performance assessmentperformance assessment

High performance work High performance work practicespractices

(HPWP based on works of Huselid, Pfeffer, Ulrich)

Key learning regarding Key learning regarding HPWPHPWP Our research corroborates findings in domestic Our research corroborates findings in domestic

US organizations that HPWP is related to higher US organizations that HPWP is related to higher levels of organizational performance.levels of organizational performance.

HPWP HPWP Organizational PerformanceOrganizational Performance

We also found a positive relationship between We also found a positive relationship between HPWP and geocentrism, lending support to the HPWP and geocentrism, lending support to the idea that organizational practices must “fit” idea that organizational practices must “fit” with each other. with each other.

HPWP GeocentrismHPWP Geocentrism

However organizational However organizational culture and HR are not culture and HR are not enough…enough…You also need GLOBAL You also need GLOBAL LEVERSLEVERS Our research has shown that the Our research has shown that the

impact of organizational culture and impact of organizational culture and HR is strongly influenced by HR is strongly influenced by geocentrism, global orientation and geocentrism, global orientation and boundary spanning policies and boundary spanning policies and practices. practices.

These are These are global leversglobal levers - focusing - focusing on HR and organizational culture is on HR and organizational culture is not enough in MNCs; one needs not enough in MNCs; one needs these critical global levers as well. these critical global levers as well.

Global LeversGlobal Levers

Global MindsetGlobal Mindset GeocentrismGeocentrism Boundary SpanningBoundary Spanning

The Global Lever of Global The Global Lever of Global Mindset: DefinitionsMindset: Definitions

““one that combines an one that combines an openness and openness and awarenessawareness of diversity across cultures and of diversity across cultures and markets with a propensity and markets with a propensity and ability to ability to synthesizesynthesize across this diversity” across this diversity” Govindarajan & Govindarajan & Gupta, 2001:11Gupta, 2001:11

““The ability to The ability to develop and interpret criteriadevelop and interpret criteria for personal and business performance that for personal and business performance that are are independent from the assumptions of a independent from the assumptions of a single countrysingle country, , culture or context, culture or context, and to and to implement those criteria appropriately in implement those criteria appropriately in different countries, cultures, and contexts” different countries, cultures, and contexts”

Maznevski & Lane, 2003:4.Maznevski & Lane, 2003:4.

Top Management Team’s Top Management Team’s Global MindsetGlobal Mindset

Measured by the following index*Measured by the following index*– Top managers in our organization have a Top managers in our organization have a

global outlookglobal outlook– Top management has a comprehensive Top management has a comprehensive

awareness and knowledge of changes in awareness and knowledge of changes in the nature of global competition.the nature of global competition.

– Top management is currently developing Top management is currently developing and implementing systems, processes and and implementing systems, processes and structures which will enable our company structures which will enable our company to successfully meet future changes in the to successfully meet future changes in the nature of global competition and global nature of global competition and global markets.markets.

– Top managers in this organization view the Top managers in this organization view the global arena as not just a market to exploit global arena as not just a market to exploit but also an opportunity to learn.but also an opportunity to learn.

* based on Ashkenas et al., 1995

FindingFindingss related to global related to global mindsetmindset

Our findings suggest that the global Our findings suggest that the global mindset of the TMT plays a key role in mindset of the TMT plays a key role in shaping employee’s attitudes towards the shaping employee’s attitudes towards the company.company.

When employees see that top managers When employees see that top managers have an awareness and knowledge of the have an awareness and knowledge of the global competitive environment, global competitive environment, employee’s commitment to company employee’s commitment to company goals is stronger. goals is stronger.

The Global Lever of The Global Lever of Geocentrism Geocentrism

Geocentrism Geocentrism – measures the ‘openness’ of the global measures the ‘openness’ of the global

HR system*HR system*– Examples of items:Examples of items:

““A manager who began his or her career in A manager who began his or her career in any country has an equal chance to become any country has an equal chance to become CEO of my company.”CEO of my company.”

““In my company, nationality is unimportant In my company, nationality is unimportant in selecting individuals for managerial in selecting individuals for managerial positions.”positions.”

* Measured with 5-item scale developed by Kobrin, 1994

Geocentrism is Important!Geocentrism is Important!

The adoption of geocentric staffing policies The adoption of geocentric staffing policies has positive effects on important has positive effects on important organizational outcomes (commitment).organizational outcomes (commitment).

Employees in foreign affiliates do not see the Employees in foreign affiliates do not see the same level of geocentric staffing policies as same level of geocentric staffing policies as those at corporate headquarters. those at corporate headquarters. What can What can companies do to mitigate this?companies do to mitigate this?

Women perceive higher levels of geocentrism Women perceive higher levels of geocentrism than men. than men. Why?Why?

Japanese MNCs have lower levels of Japanese MNCs have lower levels of geocentrism compared to their U.S., and U.K. geocentrism compared to their U.S., and U.K. counterparts.counterparts.

Other factors, such as amount of training, can Other factors, such as amount of training, can affect perceived geocentrism.affect perceived geocentrism.

The Global Lever of Boundary The Global Lever of Boundary SpanningSpanning

Boundary spanning is the linkages Boundary spanning is the linkages that integrate and coordinate that integrate and coordinate across organizational boundaries.across organizational boundaries.

The boundary spanner cuts across The boundary spanner cuts across functional, geographic, and functional, geographic, and external boundaries in order to external boundaries in order to move ideas, information, decisions, move ideas, information, decisions, talent and resources where they talent and resources where they are most needed. are most needed.

Boundary Spanning Boundary Spanning Structures and ProcessesStructures and Processes

Boundary spanning structures and Boundary spanning structures and processes include:processes include:– Shared vision, strategy and valuesShared vision, strategy and values– Formal organization structureFormal organization structure– Informal organizational structures and Informal organizational structures and

processesprocesses– Information-sharing and decision Information-sharing and decision

making approach making approach Measured with a 5-item index*Measured with a 5-item index*

* based on Ashkenas, et al., 1995

Findings re: Boundary Findings re: Boundary spanning structures and spanning structures and processesprocesses

The most successful multinational The most successful multinational corporations in our study have instilled corporations in our study have instilled widespread structures, processes to widespread structures, processes to facilitate global boundary-spanning facilitate global boundary-spanning behaviors, not just among the very top behaviors, not just among the very top executives but executives but throughout the organization. throughout the organization.

These corporations actively facilitate These corporations actively facilitate learning and information sharing through learning and information sharing through global teams, task forces, networks, global teams, task forces, networks, information technology, and global information technology, and global responsibility allocation.responsibility allocation.

Case example: Lack of Case example: Lack of organizational boundary organizational boundary spanning structuresspanning structures““If there’s an innovative movement in one If there’s an innovative movement in one office, we should have a system for sharing the office, we should have a system for sharing the information and the best practice, Now we information and the best practice, Now we don’t….[why?]…Each office, each product don’t….[why?]…Each office, each product division is responsible for making money…division is responsible for making money…There is no reward system for sharing…The There is no reward system for sharing…The bonus is related to corporate performance as a bonus is related to corporate performance as a whole, but it doesn’t motivate people to share whole, but it doesn’t motivate people to share information, because they believe if their information, because they believe if their division makes money it will increase division makes money it will increase corporate performance...”corporate performance...”

GM of one of the GM of one of the affiliatesaffiliates in our sample in our sample

Additional Insights from Additional Insights from the Studythe Study

Clarity and consensus about what Clarity and consensus about what “globalization” means is critical. “globalization” means is critical.

Actual definitions and interpretations Actual definitions and interpretations vary dramatically both across and vary dramatically both across and within companies.within companies.

How globalization is interpreted affects How globalization is interpreted affects how global strategy is implemented. how global strategy is implemented.

How would you describe your company?

Adaptable organizational culture:Rigid-------------------------Very Adaptable

Sense of mission:None----------------------------Clear & strong

Human Resource Management Policies:Cost focus--------------------Performance focus

Global mindset:None ---------------------------A lot

Ability to work across boundaries:None---------------------------Very easy

Talent is rewarded, regardless of nationality:Not true -----------------------------Absolutely!

Strategies for Success: Strategies for Success: Implications from the Implications from the Organizational Competitiveness Organizational Competitiveness Research StudyResearch Study

Advice and Action Steps: Advice and Action Steps: Developing a Global Developing a Global MindsetMindset

Companies need to select for and Companies need to select for and develop a global mindset in their TMT develop a global mindset in their TMT – Select for openness and awareness Select for openness and awareness

across cultures and contexts across cultures and contexts – Select for ability to integrate and Select for ability to integrate and

synthesizesynthesize Importance of diversity in selection is Importance of diversity in selection is

criticalcritical

Provide stretch assignments overseas and Provide stretch assignments overseas and develop incentive systems that encourage develop incentive systems that encourage qualified employees to accept an qualified employees to accept an international assignment.international assignment.

Allow individuals located around the world Allow individuals located around the world to have early and significant input into to have early and significant input into decisions and strategies .decisions and strategies .

Capitalize on expatriate manager’s Capitalize on expatriate manager’s knowledge upon reassignment .knowledge upon reassignment .

Where are your senior executives Where are your senior executives located and why? located and why?

Advice and Action Steps : Advice and Action Steps : Developing a Global Developing a Global Mindset Mindset

Advice and Action Steps : Advice and Action Steps : Enhancing Boundary Enhancing Boundary SpanningSpanning Shared culture and global mindset are key Shared culture and global mindset are key

tools to enhance boundary spanning tools to enhance boundary spanning activities. activities.

Leaders throughout the organization must Leaders throughout the organization must model the desired behaviors.model the desired behaviors.

Organizations must become increasingly Organizations must become increasingly sophisticated and design opportunities to sophisticated and design opportunities to actively facilitate learning and information actively facilitate learning and information sharing through global teams, task forces, sharing through global teams, task forces, networks, information technology, and global networks, information technology, and global responsibility allocation throughout the responsibility allocation throughout the organization.organization.

Advice and Action Steps : Advice and Action Steps : Developing an Effective Developing an Effective CultureCulture Organizations need to have a clear, Organizations need to have a clear,

compelling, and a well-understood compelling, and a well-understood mission. mission.

Companies must be adaptable and Companies must be adaptable and flexible.flexible.

Diversity in culture can be effective. Diversity in culture can be effective. Don’t over-standardize.Don’t over-standardize.

Provide opportunities for involvement Provide opportunities for involvement throughout the organization. throughout the organization.

– Carefully select employees, particularly those Carefully select employees, particularly those in leadership positions.in leadership positions.

– Provide clear job expectations and Provide clear job expectations and performance assessment.performance assessment.

– Diminish status differentiation, empower Diminish status differentiation, empower employees and decentralize decision making employees and decentralize decision making to those who have the necessary information.to those who have the necessary information.

– Provide a balance between commitment to Provide a balance between commitment to long-term employment relationships and a long-term employment relationships and a strong emphasis on individual strong emphasis on individual and and team team performanceperformance

– Invest in employee development throughout Invest in employee development throughout their careers.their careers.

Advice and Action Steps :Advice and Action Steps :Building HPWPs Building HPWPs

Advice and Action Steps : Advice and Action Steps : Increasing GeocentrismIncreasing Geocentrism

Opportunities need to be culture-blind.Opportunities need to be culture-blind. Perceptions matter! If everyone has the Perceptions matter! If everyone has the

opportunity to be CEO, this needs to be opportunity to be CEO, this needs to be well-communicated, not just at HQs but well-communicated, not just at HQs but throughout the organization.throughout the organization.

Provide training, as well as opportunity, Provide training, as well as opportunity, to increase perceptions of geocentrism to increase perceptions of geocentrism and enhance commitment to the and enhance commitment to the organization.organization.

Women may be key targets for geocentric Women may be key targets for geocentric policies.policies.

Advice and Action Steps: Advice and Action Steps: Developing Global HRDeveloping Global HR

The HR function must be seen as a critical The HR function must be seen as a critical organizational asset, and must become organizational asset, and must become less ‘stand alone’. less ‘stand alone’.

HR’s capability must match the strategic HR’s capability must match the strategic requirements of the business. requirements of the business.

HR policies and practices must reflect the HR policies and practices must reflect the strategic priorities of the company’s strategic priorities of the company’s desired future rather than legacies from desired future rather than legacies from the pastthe past..

Advice and Action Steps : Advice and Action Steps : Developing Global HR Developing Global HR

• Make sure your organization is Make sure your organization is developing employees with the skills developing employees with the skills and perspectives necessary for you and perspectives necessary for you to be a successful global competitor. to be a successful global competitor.

• How can these skills be developed?How can these skills be developed?

Make sure that HR is as global Make sure that HR is as global as your strategyas your strategy

Hire the best people into HR Hire the best people into HR Provide cross-functional Provide cross-functional teamwork, cross-cultural teamwork, cross-cultural training, international training, international assignments, and global assignments, and global forums and meetings for HR forums and meetings for HR professionalsprofessionals

Advice and Action Steps: Advice and Action Steps: Developing Global HR Developing Global HR

Thank YouThank You!!