Global Leadership Competencies

In an era when these competencies are so important, how do you assess for the ‘right’ manager style?

Patricia Shafer, President
COMPEL ORGANIZATIONAL EXCELLENCE ALLIANCE, LTD. • pshafer@compelconsulting.com

In the past few months, I’ve met with more than 300 Human Resource professionals while facilitating workshops on “Profiling the Best Organizations of Tomorrow” and “Developing Truly Global Leaders.” The focal points of our conversations ranged far and wide but one theme has been consistent. HR personnel are increasingly expected to guide their organizations in the training and development of managers with a global mindset. And they’re looking for suggestions on how best to do so.

HR managers – even at undeniably multinational firms – are realizing that they themselves need more grounding in the fundamentals of developing global leadership competencies. Moreover, they can be frustrated by the disparity of views on what actually constitutes global competence. It’s little wonder, given that some organizations have chosen to focus on a very small core set of global competencies needed by managers, and others have lists of several hundred qualities spanning multiple pages. The situation prompts HR professionals to ask:

• How do we know which managers will be successful in a multinational setting?

• What are the best assessment tools?

• What classes, coaching and experiences should we provide and to whom?

Initial Response: Consider Three Questions
My first response to these queries takes the form of three questions that I suggest HR professionals reflect upon. They are:

• Do executives in your organization want to ensure that managers are aware of the need for a global mindset, or, are they motivated to craft and enact a strategic and systematic global leadership development framework?

• Does your organization typically focus on short-term tactical training initiatives, or, is there a pattern of more forward-looking and comprehensive efforts to create competitive advantage through people?

• Are you, personally, prepared to serve as a global leadership champion, as well as recruit and support other champions embedded in the business?

By answering these questions, HR professionals are better equipped to make an important decision. As indicated by Allan Bird and Joyce S. Osland in their research on global competencies, organizations and their HR staff must acknowledge above all a distinction between preparing novice global managers to understand basic realities of work in a global context vs. striving to achieve a cadre of expert global managers with a requisite repertoire of attitudes, skills and behaviors. Bird and Osland rightly suggest that there is a quantum leap difference in capacity development for novices and experts. Accordingly, it’s important to define an organization’s global management need and intention (basic training or advanced development) and therefore what opportunities and responsibilities exist for the organization’s HR professionals.

Globally Successful Traits In cases where an organization is prepared to “go the (global competence) distance” with at least a portion of the manager population, one challenge is to assess who has the ‘right style strengths’ and who needs focused feedback and coaching. This can be frustrating for HR professionals once they realize that only a very small percentage of research on effective leadership skills has been conducted with an international outlook and or produced outside North America. The same is true of leadership assessment tools; those that are most well-known tend to be developed in the United States for American managers and then exported for use elsewhere.

Nevertheless, there is a growing body of evidence that’s been gathered over the last twenty years and points to certain leadership traits being likely to ensure multinational managerial success. General competencies around problem-solving, decision-making and general management are, of course, among them. But in many ways, these are merely foundational. Critical, higher-order traits actually lie on the “human side” of organizations and are characterized as “people and soft skills.”

Take as one example research recently published through the Harvard Business School, titled: “Innovation through Global Collaboration: A New Source of Competitive Advantage.” The primary conclusion is that firms effectively managing global innovation are able to do so because their managers operate with a spirit of multinational collaboration that is strategic, evident in how a firm is organized, and energetically incorporated into staff and process capabilities.

My colleagues and I have reached complementary conclusions based on a multinational research initiative that I co-led, titled “The Whole World at Work” (Compel Ltd., 2006). The findings underlined that successful global managers are exceptionally facile at bridging geographic, divisional and other differences because they are communicative and collaborative consensus-builders eager to listen to and integrate multiple perspectives.

And similar themes emerged in one of the most comprehensive projects on the subject to date. In a multi-year investigation of more than 900 organizations and 60 societies known as “The Globe (Global Leadership and Organizational Behavior Effectiveness) Study,” key manager traits discovered to be universally desirable and effective included being team-oriented, participative and humane. Negatives included being self-protective and autonomous, in other words, operating from self-interest rather than for the greater good.

From Broad Mechanics to Deep Mindfulness
So, what ultimately is the path that an HR professional must take as well as guide his or her organization down in order to be globally successful? It’s to start by making sure the “tactical mechanics” of global skills education and training are covered. This includes increasing manager access to and awareness of an organization’s multinational strategies, as well as market specifics and cross-cultural training. But the more advanced and savvy undertaking is to strategically support the assessment and development of managers with a deep mindfulness and respect for how to behave on the world stage.

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International Teams

by NEAL R. GOODMAN, Ph.D., President
GLOBAL DYNAMICS INC. • ngoodman@global-dynamics.com

The Challenge

Has your organization launched global product teams? Are you developing a shared vision to span the globe?
Do you have international project teams? Is your company initiating international policies, standards and practices?

Are your international teams dealing with issues of trust, respect and competency?
Are key executives and managers working around the globe?
Are your team members from many different countries and cultures?

When International teams are formed, team members don’t necessarily recognize the impact that their different attitudes, perceptions and assumptions may have on their teamwork. Invisible cultural forces profoundly affect the team’s goals as well as day-to-day functioning. Each team member’s style of thinking and communicating is significantly affected by their cultural upbringing. Issues of leadership, power and control, decision-making, trust and respect take on different meanings and significance in international teams.

Most International Teams Work Well Below Their Peak Efficiency – Why?
The primary cause of failure in international teams is not a lack of intelligence or technical skills. Misunderstandings and differences in perceptions and expectations create a lack of trust and mutual respect which reduce productivity and effectiveness. For these reasons many organizations are providing international team building programs to those working on international teams.

Int’l Teambuilding Programs (ITP)
An organization’s international team members are the key players who determine the success or failure of the organizations’ global strategies. An ITP teaches team members to expand their thinking and communication patterns, providing them with the skills to build strong, productive, stable international teams. Effective ITPs uncover the invisible cultural domain that underpins team interactions and transactions. There must be a focus on the cross-cultural problem-solving skills that are essential in fast-paced, rapidly changing international markets.

Special emphasis should be given to the skills needed to work and communicate effectively in international teams. With more geographically dispersed teams becoming the norm, attention must be given to culturally appropriate e-mail protocols, the timing of conference calls and teleconferences, and the need for face-to-face interaction. In a successful ITP, participants should learn about themselves and their own cultural attitudes and values. They also should learn to constructively adapt to their team members’ cultural expectations and needs.

Neal R. Goodman, Ph.D. is President of Randolph, New Jersey based Global Dynamics Inc., an international consulting firm that provides training and organization development solutions to global companies working across cultures. CRN is proud to present this first of a series of articles and information on this timely and important topic.

Leadership: The Single Most Important Trait of Success

Lou Adler
The Adler Group • lou@adlerconcepts.com

Probably everyone knows this already, but it’s worth a reminder. There is one competency that overrides all others combined. I call it the master competency. In fact, during an interview you only need to assess a person for this one single competency to determine if the person is a good fit for the job. To make it even easier, you only need to ask one question to determine if the candidate possesses this trait or not.

Of course, the competency I’m putting on this grand pedestal is LEADERSHIP. But leadership has a lot of different forms, and this is where things get a little more complicated.

Up until recently, I put leadership on par with other important traits of success, but it wasn’t in my top three. Before now, my top three were competency to do the work, motivation to do the work, and team skills. From my experience, if a candidate could demonstrate that he or she had these three traits in spades, there was a 75% to 80% confidence level that the person would be a top-third performer. When I added leadership into the mix, the confidence level increased to 80% to 90% for a top 10% performer.

For definition purposes, competency to do the work means that the person possesses all of the skills and abilities required to do the work or has the potential to learn whatever is necessary. Motivation to do the work is even more important than competency to do it. This has to do with work ethic, drive for results, and interest. The most common mistake is hiring someone who is competent to do the work but not motivated to do it; that’s why motivation to do the work is so important. Team skills relate to all of the issues involved in working with others including cooperation, influencing, supporting, and listening, among others.

The reason leadership is the most important trait of them all is that it requires the collective combination of these three critical traits to pull it off. In my new model, competency, motivation, and team skills are a subset of leadership. You need them all to be a leader. If you consider all traits and competencies to be in a hierarchy, leadership would be at the top, and competency, motivation, and team skills would be on the second row.

Other competencies like organization and planning, creativity, problem solving, and decision-making would be on the third row. If your company has a competency model, you might want to develop some type of hierarchy like this. As you’ll soon discover, if you measure only leadership during the course of the interview you’re actually measuring every other competency and skill at the same time. And as those of you who have tried it out know, my one-question interview is all you’ll need to use to assess leadership skills.

Here’s the high-level take on how this is done. First, ask the hiring manager where leadership needs to be applied to be truly successful on the job. You’ll get stuff like lead a team, create a new product, overcome resistance to change, improve a process, implement a new system, solve a series of problems, or open a new territory.

For a retail floor position, leadership might be evidenced by the person meeting every customer who walks into the department. For a senior executive, it might be building a new team to change the company’s strategic direction. For an engineer, it might be leading the design effort on a new product. To be a top performer, leadership is required to some degree in every job at every level.

At some level, it’s taking the initiative to do more than required. So if you want to hire more leaders, the one question you need to ask them is where they¹ve taken a leadership role.

I’ve been doing a lot of interviewing of late for positions as diverse as a sales manager for a company that prints safety brochures, senior-level consultants for international financial assignments, and marketing executives in high technology. Once I knew where leadership was required in each job, all I had to do was ask the candidates to give me examples of where they demonstrated comparable leadership. In the case of printing safety brochures, it was developing and growing a team of super salespeople and opening up new distribution channels. For the consulting assignment, it was getting more business.

With the international investment banks and creating a new method of evaluating international financial risk. For high-tech marketing, it was leading the effort to create a long-term product road map and building the team to do it.

No matter what anybody else tells you, interviewing is easy if you know what you’re looking for. Just ask the person to give you a detailed example of something that person accomplished related to what you need done. I asked the candidates for the printing position to give me examples of where they led the training and development of a sales team. For the consulting candidates, I asked them to give me examples of where they built new business and how they evaluated financial risk. For the marketing executives, I got examples of the most significant product road maps they created. Of course, none of the people gave me the right answer right away.

Asking the question is easy; getting the answers requires a bit of digging. This is where fact-finding is critical. I needed to follow up to have the candidates give me specific details of the projects, when they occurred, the role they played, the results achieved, the plans they made, how and why they took different actions, the problems they solved and the ones they didn’t.

After digging for about 10-15 minutes, I got a good picture of how well the candidates led their respective efforts. I then compared what the person accomplished to what needed to be accomplished to determine fit.

What’s really interesting is that when asking about leadership, you get insight into everything that makes up leadership.

This is stuff like technical competency, motivation to do the work, team skills, commitment to succeed, drive for results, management style, cultural fit, attitude, personality, problem solving, decision making, tolerance for risk, communication skills, and potential for growth. Wow!

By asking the same leadership question for a variety of projects over different time spans in different jobs and with different companies, I could observe the growth of leadership over an extended period of time. You can do this if you’re hiring entry-level people for a retail store or a quick service restaurant. We did this for REI Coop, In-N-Out Burger, Chuckie Cheese, and Arby’s. We did something similar for the YMCA in hiring camp counselors.

Just ask your candidates for multiple examples of where they’ve taken a leadership role in any type of work or project. It could be school, church, charities, clubs, sports, or part-time jobs. The best people take leadership roles all of the time, whether they¹re 15 or 50.

From now on just look for leadership traits in the people you hire. Then hire those that have taken a leadership role in what you want done. The one common trait of all successful people is leadership.

To become a leader, you need to work hard, have the right set of skills and abilities, and work well with others.

However, working hard, having the skills, and working well with others doesn’t always mean you¹ll be leader. It means you’ll be a great employee.

That’s why looking for leaders who have accomplished something similar or comparable to what you need accomplished is the key to consistently hiring top people.

Leadership comes first. Everything else is second. Focus on this one trait using this one question and you’ll be as good an interviewer as you ever need to be.

The Adler Group is a training and consulting firm helping companies make hiring top talent a more systematic process (www.adlerconcepts.com). His Amazon best-seller, Hire With Your Head (John Wiley & Sons, 1997, 2002), started the performance-based hiring and selection movement. This was followed-up with the award-winning Nightingale Conant audio tape program, POWER HIRING: How to Find, Assess, Hire and Keep Great Talent (1998). His latest book project, The Future of Hiring (2005), describes how to combine technology, creative sourcing, and a great recruiting organization to make hiring the best a true business process. Adler is a veteran recruiter and founder of CJA Executive Search. His early industry career included general management positions with the Allen Group, as well as senior-level financial management positions with Rockwell International’s Automotive and Consumer Electronics groups. Adler holds an MBA from UCLA and a B.S. in Engineering from Clarkson University, New York.

Hire Military Vets

“The human resources market for former military candidates is underestimated,” said, James J. Hickman, President of Black Knight Recruiting. “We provide solutions to facilitate the transition process with our unique, in-depth, hands-on approach. Through no cost to our emerging leaders, we will execute a transition plan personalized to meet the employment needs of our candidates and the human resource needs of our client employers.” Through a comprehensive search process across Fortune 1000 companies, Black Knight Recruiting offers an unwavering commitment to excellence: the right candidate with the right skill set in the right position.

With years of experience on both sides of the recruiting process, Black Knight consultants draw on personal and professional experience to facilitate the transition process. After a comprehensive search, the Dallas based firm uses a multi-dimensional profiling methodology that penetrates to the core of a candidate’s strengths and leadership style to ensure a cultural and functional fit for each position.

Candidates are assisted with all aspects of the transition process, including self-assessment, resume development, interview preparation, and offer negotiation. Black Knight Consultants work with executive decision makers and HR departments to help determine personnel requirements and effectively articulate the skill sets of our transitioning candidates. Black Knight offers candidates a no-cost solution to this complex process, while offering the employers talent, experience, and leadership. “Many civilian organizations have never realized the untapped value of military experience”, stated James J. Hickman – President of Black Knight Recruiting.

Conceived by West Point graduates, Black Knight Group, Inc. was formed as a holding company which owns the controlling share in Black Knight Capital, Black Knight Consulting, and Black Knight Recruiting. To find more information about Black Knight Recruiting, please visit http://www.blackknightrecruiting.com or contact James J. Hickman, President; james@blackknightgroup.com; phone 1-214-245-4628

Candidate Selection

by BARRY KOZLOFF, President
SRI SELECTION RESEARCH INT’L, INC.

How can we fail as an international company? How can we help our competitors have a competitive advantage over us? How can we marginalize our capital investments around the world? How can we fail to manage our risk?

As absurd as these questions sound, a proven, fool-proof way to accomplish these goals which are counterproductive to the organization, is to not properly evaluate candidates, their spouses or partners and families for global assignment.

Making non-selection of personnel for international assignment an almost informal policy is not a standard practice of companies. The non-selection blind spot is universal, no country or company is immune. Vittorio Tesio, Vice President Human Resources at Fiat SpA, Torino, Italy says, “We [Italians] are no different than US companies in selecting people for international assignments. Whoever speaks Russian is the person who goes to our plant in Russia. We emphasize speaking Italian, assuming many things about their abilities, when we hire someone locally…”

International Selection is a protocol and an integrated system. An organization might not be able to do all of the following, but intelligently made selection decisions require rich, significant information from many sources or data points – triangulated pieces of information to make reliable, predictive choices. And, then, there is the task of how to manage people once the company knows their strengths, gaps, and needs. Assessment is not over with the selection decision. Like in the writing of a novel, the ultimate success of a selection process is in the follow-up – the editing.

Selection and manpower development requires a systematic approach which should include as many of the following steps:
• Background reference checks:
– Internal: performance evaluations,
personnel records, academic records
– External: work references, background/
police check
• Medical exam (drug/alcohol, too)
• A general physical
• International self-assessment/readiness
instruments:

A self-evaluation of the candidate and family’s readiness in the form of a self-guided, self-report can be a valuable investment for the success of the assignment. The benefits of a self-assessment tool for the potential expatriates and the organization are further realized through a structured interview/de-briefing conducted by Human Resources.

A cautionary note about candidate testing: When looking at candidate assessment inventories, tests, or profiles – a company should use standard, published psychological instruments, with national norms, to ensure adherence to Federal Uniform Guidelines on Employee Selection Procedures (1991 Civil Rights Act, ADA, Right to Privacy) and Standards for Educational and Psychological Testing. Most international assessment instruments, tests, profiles do not adhere to the Federal guidelines opening companies to liability. Instruments which have been designed using a company or organization’s employee population do not adhere to the uniform guidelines. Request the vendor of the assessment tool to provide you their published research manual to decide if the results of their research generalize to your company’s population.

Candidate selection decisions should involve data from operations, Human Resources, and assessors with the appropriate credentials, academic degrees, and clinical training.

Structured supervisor evaluation instruments provide information about the candidate’s repertoire of abilities and skills and their transferability to a different business environment. Supervisor interviews provide critical information about the employee or manager’s job suitability.

Technical Interview(s): Assessment information about
candidate job fit received from managers familiar with the
candidates performance, as well as, their prospective supervisor.
Formal, International Assessment Interview and Testing: The psycho-social evaluation should only be conducted by a well-qualified assessor with appropriate academic degrees, professional credentials and certification. They should provide assessment results in a manner which makes sense to the company in terms of job fit, development and career planning, organizational and succession planning (repatriation).
Expatriate Case Studies: Let us look at an example played out thousands of times, in various scenarios. A major U.S. chemical company with decades doing business around the globe entered into a joint venture with M, a major Japanese company. The U.S. company decided to send their General Manager, John, in the Hong Kong office, to be in charge of the joint venture between the U.S. and Japanese company. A formal evaluation of John and his wife, Barb, learned that John and Barb were quintessentially “Ugly Americans.” (Strange to use words from a book written in 1958 to describe cross-cultural behavior prevalent today). John evidenced possible emotional instability and a high probability for engaging in white-collar crime. If that were not enough, standing in his paneled office overlooking Hong Kong’s harbor, delicate Chinese porcelains arranged on his desk, John said, “I’ll tell you the difference between living in Singapore and Hong Kong – the Chinese in Hong Kong are pushy and can’t be trusted.” Barb’s smiling face moved up and down in cheerful agreement with her husband’s comments.” John made his comments in a loud voice with his office door open to his Chinese secretary sitting six feet away speaking with two of the company’s Chinese sales managers. Do John and Barb lack tolerance? Yes. Do they demonstrate a deficiency in their social sensitivity? Yes. Was there a strong chance they are ethnocentric? Definitely. Did we observe gross arrogance and stupidity? Absolutely!

When company executives received the results of John’s and Barb’s assessment for international assignment suitability, and that John was recently observed making fun of Japanese cuisine at a dinner party hosted by their new partner’s in Japan – they said, “But John is a global manager, he’s lived in Brazil, Singapore, Hong Kong, and he speaks different languages.”

Someone should have told these managers that their criteria for a global manager could also be applied to Nazi SS officers who had escaped from Germany after WWII, found refuge in other countries, learned to navigate through different languages and cultures. John and Barb went to Japan with John as head of the joint venture. Three years later he was fired from the company after financial improprieties were discovered. This true story highlights not only the cost of an poor international selection it also points a finger squarely at the selection practices in general use in his company. While this man was being promoted to positions of high responsibility during his twenty years with the company, who was evaluating the managers who were doing the promoting?

Now, let’s look at Barron’s Bank of London, now defunct, brought down by the corrupt trading practices of one of its British expatriate securities traders in Singapore. Barron’s, upon moving into this line of business, hired an apparently experienced, motivated young man for its Singapore office. Dr. Alastair Macfarlane, a British consultant reported the employee who brought down Barron’s had previously worked for Morgan Stanley in London. However, Morgan Stanley had done a much more thorough job evaluating its people and would not allow this fellow out of the back room operation and on to the trading floor. Unable to advance on to the trading floor where he saw enormous amounts of money to be made, the employee left Morgan Stanley selling himself to Barron’s Bank. Barron’s loss was the national debt of most developing countries.

In a 1995 survey of international staffing and selection practices of 650 corporations by Selection Research International (SRI) for the National Foreign Trade Council in New York – 31% of the survey’s respondents reported their organizations used international assignments as a way to get rid of people. Line managers made 98% of the decisions about who got selected without drawing from any objective assessment information. Moreover, 98% of the line manager’s decisions were based on the candidate’s technical skills. 98% of the same respondents reported people failed to complete international assignments, or did not perform as well as was expected, not because of any lack of technical skills; but because of personality-based factors, interpersonal style, and family conditions.

What would stock holders do if it got out that corporations used international operations to remove people who were not liked, were recognized as poor performers, or selected because a manager in Mexico had simply worked with them five years before in Wichita, Kansas?

What we are looking for in people who can adapt to new living and cultural conditions and where the employee is a good job fit – are the characteristics, the conditions or factors which make one person or couple better than another for an international assignment. For example, what is it about a couple who have lived their entire lives in Texas, where the employee has been “Mr. Telephone Company” in a dozen small towns in the Rio Grand Valley during his twenty-five year career – potentially more successful than our pseudo-global manager and his spouse. What is it about this couple which will enable them to move to Preston, England where he will be in charge of 150 British cable splicers following on the heels of the British supervisor who has recently been let go? During their formal evaluation the Texas couple admitted “Until recently we’d never met a Jew or an Italian, and, we just got back from a two-year foreign assignment – we lived in New Jersey.” As they described their experience creating a new lifestyle in New Jersey they related how their son and daughter attended Hanukkah services with their Jewish neighbors and they invited their Jewish neighbors’ children to their home for Christmas, so that the children would understand and have respect for the beliefs and ideas of other people. As a measure of how effectively our Texan performed in the U.K., the British subcontractor requested he and his wife stay an additional two years on the telecommunications project.

Technological advances have always outpaced the ability of societies to integrate them. The Hubbell telescope peers into the dark, humming corners of the universe, and a Peace Corps volunteer in Nepal reports a Brahman teacher stated unequivocally to his students the world is flat, because it is written in sacred text. There often is a disconnect between peoples’ expectations and needs, and their views of the world – whether a Brahman teaching students the world is a shimmering disk whirling in cosmic space or an executive thinking he is a global manager whirling around the world in a shimmering cylinder / jet.

“There is an old adage in personnel, if a company has ten dollars to spend on personnel nine dollars should be spent on selection,” says Dr. Edmund Gaydos, Director of Management Development and Organizational Development at Anheuser-Busch Companies. Gaydos goes on to say, “Selection is a technology (as much as financial methods and procedures) that supports every strategic business objective and tactical goal. Companies usually have all of the skills and knowledge to achieve their objectives. But require a selection system to identify the people who have these skills.”

Global Competencies Factors and Conditions Predicating Success and Failure:
There are specific traits and conditions known as “foundation competency” which predict international success. The competence of success is a constellation factors which produce “job suitability” and “cultural adaptability.” Selection is more than looking at someone as if they have a particular genetic predisposition for living in a particular country, such as a gene for London, Cleveland or Bandung, Indonesia. A person might adapt exceptionally well to a particular country, we can say this person has an affinity for a particular culture, and might be able to create a satisfying lifestyle for them self and their family. However, none of this proves the individual possesses the abilities that are necessary for accomplishing the job (i.e. the ability to maintain formal and informal relationships at post, as well as with the home organization, can sell their ideas cross-functionally, function as an individual contributor, team member or build a team; communicate with people from diverse upbringings, backgrounds, temperament styles).

The effects of improper candidate selection are more apparent and pronounced when people transfer from a domestic environment to another country; where they lose the insulating social connections of the home organization that buffer them from scrutiny.

What can companies do to ensure the quality of their global staff?
Selection technology is the central function for the identification, development, and management of the entire workforce. It comprised a series screening gates, data gathering points of relevant, significant information about the employee and his or her family. Keep in mind the employee and spouse (partner) must always be considered an inseparable unit for international assignment, whether they are considered for an assignment in Prague with an in-country date three months away, or for career development and participation in a global talent pool.

Global Selection is a System
What can companies do to reverse the Alice in Wonderland selection practices which exist today in too many organizations? Assessment and selection are elements within a protocol which includes: company-directed activities, medical screening and background checks, candidate self-assessment / readiness tools giving both the candidate and the company a heads-up about strengths, as well as, potential areas or concerns requiring greater or lesser degrees of assistance; a structured interview of the employee’s supervisor to learn about their strengths and developmental areas, and structured interviews by the receiving operations and human resources. In-depth information comes from the formal evaluation and testing procedures conducted by qualified assessment experts following the Federal Uniform Guidelines on Employee Selection Procedures.

Formal psycho-social evaluation enables the organization to obtain information about the individual and family related to their potential for adaptation and job suitability. Conducted in a structured confidential manner the formal assessment focused on strengths and deficiencies for customizing cross-cultural training and destination support, and provide the company a developmental plan for assignment management and career counseling. This last step links repatriation and after-assignment retention with selection as part of career planning versus making selection a simple go / no go proposition which will contaminate the entire process in the minds of most candidates. In addition, the assessor-conducted evaluation serves several functions: information for candidate selection and job fit, counseling the candidate and spouse to make a well-informed selection decision, customizing training and in-country support, and career planning and performance management.

Done correctly, much sound decision-making information comes out of an integrated international selection process. Done incorrectly, the costs to the company and to the individuals’ happiness are enormous.

The international factors and conditions predicting cultural adaptability and job suitability (International competencies):
The international competencies appear as a configuration, an inseparable group. Like a spider’s web you put a load on one strand and the entire web vibrates. The same with individuals and families for international success factors. The factors never appear in isolation; they are imbedded in a person’s personality appearing in their interactions and significant relationships.

The configuration of International factors or competencies include: Confidence and Emotional Maturity: Comfortable with oneself and taking initiative – but decisions do not cause problems for or are harmful to other people.

Tolerance: How fast a person judge’s the actions and beliefs of others. But if they are critical, they do not act in a discounting way.
Flexibility and Adaptability: Mental and physical capacities for dealing with change coping with new and novel situations.

Insight: Introspection, self-reflective, insight into one’s behaviors and motives, as well as to others.

Social Intelligence: Understanding and sensitive to the subtle, important aspects in social interactions; ability to scan one’s environment.

Interpersonal Style and Skills: Ability to communicate effectively, contribute to a team, work effectively with and through people, adopt different styles – from directive to process oriented.

Problem solving and Decision-making: Critical thinking skills, set priorities, and identify alternatives.

Intelligence: The ability to handle complex information quickly and efficiently. Responsibility: Solid set of personal values encompassing commitment to tasks, objectives, the organization, achievement, and aspirations. Requires perseverance and staying power.

Motivation: What are the drivers, the impelling anchors in a person’s life for taking an international assignment which will sustain him or her – employee and spouse. They are the anchors, the internal resources underpinning realistic expectations.

Values and Ethics: Solid set of personal values which is inclusive of other people, a moral obligation to do what is right; and a lack of calculating the personal advantages to oneself – not self-serving.

Independence: Not dependent on others for validation. Possessing the internal resources and skills for making choices and building a balanced, meaningful lifestyle.

Relationships (kind/satisfaction): Spouse or significant other, interdependence, dependents: children, parents, siblings former spouse.

Barry Kozloff co-founded Selection Research International, Inc. (SRI) in 1978 with Edmund Gaydos, Ph.D. SRI is group of international psychologists and management consultants specializing in global selection technology for expatriate and executive assessment, workforce development, assignment and performance management. SRI has five service areas: formal psycho-social evaluation procedures, four global assessment and development instruments, assessment training for corporate staff, organizational consulting: executive assessment, developmental planning and coaching. SRI’s domestic work includes designing selection systems and auditing for corporations vendor psychological assessment and testing services to ensure their compliance to Federal selection guidelines and testing standards. SRI’s headquarters are located in St. Louis, Missouri, tel: 1.314-567-6900, www.sri-2000.com.

International Benefits: Defined contribution, hybrid plans prevail among world’s leading employers

New York — Most employers offering retirement plans to supplement government-sponsored pension systems now do so through defined contribution (DC) or hybrid approaches, according to a new global guide from Mercer.

Mercer’s Introduction to Benefit Plans Around the World: A Guide for Multinational Employers was created to help global companies more effectively assess, compare and provide retirement as well as medical and other group benefits to their employees.

“Multinational and local-country employers face many pressures – such as an aging population, market volatility, and increased governance and accounting requirements – that are hastening the move to defined contribution and hybrid plans,” said Giles Archibald, a Mercer international consultant based in New York.

“While DC and hybrid approaches have understandable appeal, their popularity may come at a cost,” Mr. Archibald continued. “We anticipate some reassessment of their use as companies make more of an effort to truly understand the impact of these retirement plan designs on employee savings and retirement patterns.”

Deborah Cooper, principal in Mercer’s London office in the UK, observed, “Increased reliance on defined contribution arrangements will lead to more government intervention. This will in turn increase costs. Hybrid arrangements can balance the risks employees face by relying on investment markets in pure DC schemes, with the regulatory and financial pressures experienced by employers providing DB schemes”.

Traditional defined benefit (DB) plans remain the predominant type of supplemental retirement plan in a number of countries, notably Japan, the Philippines, South Korea, Mexico, Venezuela, Finland, the Netherlands and Israel (see Table 1). Even among these countries, however, there is a strong trend toward covering newly hired employees through DC or hybrid arrangements.

Mercer’s Introduction to Benefit Plans Around the World provides extensive information on the design and prevalence of retirement, medical, sickness, disability and death benefit plans provided by multinational and leading local companies in 47 countries. This single-source, comprehensive guide also provides information on each country’s legislative, legal and regulatory climate.

Mercer’s guide summarizes key global trends, by country, as companies:

Move away from defined benefits
Raise the retirement age
Comply with new requirements for plan governance
Introduce new types of benefit plans
Grapple with rapidly rising medical costs

Additionally, it defines the mandatory retirement practices under local law and regulation, summarizes typical market practices, assesses the general pension environment, identifies opportunities and trends, and outlines recent and proposed legislation.

Mercer is a leading global provider of consulting, outsourcing and investment services. Mercer works with clients to solve their most complex benefit and human capital issues, designing and helping manage health, retirement and other benefits. It is a leader in benefit outsourcing. Mercer’s investment services include investment consulting and multi-manager investment management. Mercer’s 17,000 employees are based in more than 40 countries. The company is a wholly owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York, Chicago and London stock exchanges. For more information, visit www.mercer.com.

GEN Y and EMPLOYEE BENEFITS

David Friedman, president of RSI, an employee benefits firm in Mount Laurel, N.J., said; “Most recent college grads — part of the so-called Generation Y — aren’t all that focused on the benefits packages their employers are offering. They want to get a job and they want to make money. They don’t know anything about it and they don’t really care.”

“But when those Gen Yers do get situated, Friedman said, and reach their late 20s and 30s, what they will want out of their workplace and their employee benefits will be different than the so-called Generation X that came before them — and drastically different than the baby boomers before them.”

Friedman and others in the employee benefits field agree that, more than ever, families are trying to juggle jobs and home life. And while generations past have just lived with workplace rigidity, that is changing. “When you look at the generation coming up now, I think the thing that generation will value more than anything is flexibility,” Friedman said. “People want to have a more balanced life.”

Friedman said a flexible workplace may be one that allows its workers to work flex-time hours, for example 7 to 3 instead of 9 to 5, or it could offer day care so that employees can juggle work and home more easily.

Friedman said the change in expectations is because roles — for instance, gender roles — have become less rigid and there are fewer expectations for work. Plus, many workers in American society are much wealthier than they used to be and have more lifestyle options available.

“It’s no longer ‘You’re born this way, and here is what your expected role is,” Friedman said. “Today, they’re so many more choices available to everyone.”

A new study by Mercer Human Resource Consulting shows that, in fact, Gen Yers are looking for different benefits from the workplace and more flexibility. Called the 2002 People at Work Survey, that study found that employees ages 18-24 (those falling in the Gen Y category) are a lot different than even Gen X employees. It found that Gen Y employees are more likely to say their motivation at work is influenced by a flexible workplace and opportunities for promotion, not salary. The study found that 83 percent of those in the 18-24 age group were motivated by flexibility, while only 73 percent cited salary as important. Those in the older age groups were less likely to want flexibility, yet more likely to want higher wages.

“Flexible working arrangements are highly prized by Gen Y workers,” said Debra Besch, a senior consultant in Mercer’s Philadelphia office.

Aging Workforce = Knowledge Risk

New York — Many U.S. organizations are failing to capture critical workforce knowledge and experience from older employees facing retirement, and few organizations are transferring that knowledge to newer employees, according to the results of a survey by Accenture (NYSE: ACN) (www.accenture.com).

The survey, part of an ICR/International Communications Research omnibus survey, entailed querying 504 full-time U.S. workers between the ages of 40 and 50 by telephone in March 2005.

The survey of more than 500 full-time U.S. workers between 40 and 50 years of age found that nearly half (45 percent) of respondents’ organizations do not have formal workforce planning processes and/or tools in place to capture their workplace knowledge.

Additionally, one-quarter (26 percent) of respondents said that their organizations will let them retire without any transfer of knowledge. Just 20 percent said they anticipate an intensive, months-long process of knowledge transfer prior to their leaving, 28 percent said they believe the knowledge-transfer process will last one or two weeks, and 16 percent think they will simply have an informal discussion with others in the organization prior to retirement.

“If they don’t act soon, organizations will face a major exodus of institutional knowledge, as their most experienced employees leave the workforce. With more than 25 percent of the current working U.S. population reaching retirement by 2010, companies must undertake workforce development and training initiatives to capture knowledge and minimize its loss. Additionally, they must support these initiatives with technology, which can help capture critical information and distribute it directly to employees’ desktops,” said Kathy Battistoni, a partner in Accenture’s Human Performance practice.

Despite the potential loss of workforce knowledge and experience, workers remain committed to their employers.

According to the survey results, more than two-thirds (70 percent) of respondents said they expect to retire from the organizations at which they’re currently employed, and half (49 percent) said they expect to remain in their current positions until that time. The vast majority (88 percent) said they are willing to acquire new skills, nearly half (46 percent) said they are willing to relocate for their employers, and more than one-third (39 percent) said they are willing to work longer hours. Yet four in 10 (41 percent) said their companies are doing only a fair or a poor job of providing the training they will need to meet the skills challenges they will face prior to retirement.

At the same time, few companies take advantage of the experience and expertise of their retired workforce. Just one-third (34 percent) of respondents reported that their companies hire retired employees as contractors so those former employees can transfer their knowledge and skills to their replacements.

“Companies should take three critical steps to meet the challenge of transferring knowledge from retiring employees,” said Battistoni. “First, they must understand the extent of the problem, including the skills at risk, and their organization’s ability to tackle it. Second, they must develop a strategy to capture and transfer core skills from retiring employees and to identify, attract and retain new workers with critical skills. Finally, they must manage and measure the progress of the entire effort. The bottom line is that leaders in this arena know that capturing critical workforce knowledge and skills can’t be left to chance.”

Among the survey’s other findings:

– Most employees’ plans for retirement have not changed over the last five years.

The majority (58 percent) of respondents reported that, over the past five years, they have not changed the age at which they plan to retire, versus 41 percent who said their plans have changed. More than half (53 percent) said they expect to retire before age 65, while 29 percent plan to do so between 65 and 69, and 17 percent expect to do so after 70.

– Finances determine retirement plans.

Three-quarters (74 percent) of respondents whose plans for retirement have changed said they plan to retire later than originally expected. For more than half of these respondents (55 percent), the chief reason for the change is that their financial situation is not as secure as they had hoped, while 20 percent of the respondents said they still enjoy working and therefore plan to delay their retirement. Just 21 percent said they plan to retire earlier than anticipated.

– Retirement security is uncertain.

More than two-thirds (68 percent) of respondents said they are somewhat or very concerned about the ability of their pensions and government-sponsored programs to provide comfortable support after retirement. Yet 58 percent said their employers do a good or excellent job of providing financial compensation and investment opportunities to ensure a more secure retirement.

Accenture is a global management consulting, technology services and outsourcing company. Committed to delivering innovation, Accenture collaborates with its clients to help them become high-performance businesses and governments. With deep industry and business process expertise, broad global resources and a proven track record, Accenture can mobilize the right people, skills and technologies to help clients improve their performance. With more than 110,000 people in 48 countries, the company generated net revenues of US$13.67 billion for the fiscal year ended Aug. 31, 2004.

10 Ways to Success …Contract Recruiting

by JUDITH L. ENNS, Ph.D., Managing Director
HR SOLUTIONS • judyenns@hrsolutions.com

Through the management of many contract recruiting assignments and recruiters, I have learned that a number of factors contribute to positive recruiting results for companies employing contract recruiters, the absence of which almost certainly concludes in unsuccessful recruiting assignments.

Further-more, close collaboration between contract recruiters and their end-user hiring managers to custom/processes, even those which have been finely honed by the company’s employment group, is a requirement for successfully attracting and securing talented individuals in an opportunity-rich hiring environment.

The 10 critical success factors outlined here are the road map for effectively utilizing contract recruiters to do the job for which they are engaged. The company with the best people wins. Contract recruiters can help you win the talent war if they are managed well and if communication flows freely.

Factor #1: With the contractor write clear expectations and timelines.

Expectations about
(1) the number of jobs to be filled realistically,
(2) in what time frame,
(3) in what priority,
(4) following and reporting on what recruiting metrics,
(5) with what amount and medium of communication between recruiter, manager and human resources,
(6) the “go to” person for resources and problem solving,
(7) the number/location of job fairs, web sites to use, travel, expense reporting, and
(8) the handoff when the assignment is concluded – must be agreed upon and memorialized before work begins.

Clarification of these issues in writing becomes the scope of work agreement toward which contract recruiters can work, and is the document by which managers can assess their progress.

Factor #2: Provide current, useful position descriptions to contract recruiters.

Along with contract recruiters and hiring managers review all open position descriptions. Before recruiters review resumes or make screening calls, confirm that the descriptions are, in fact, the real and urgent positions to be filled. Recruiters need to work on real openings to satisfy moving target deadlines and product roll-out dates. If descriptions must be created, ask contract recruiters to assist with that project first. Contractors who source, recruit, screen and interview blind spend your time and money ineffectively.

Factor #3: Introduce your recruiting metrics to contractors, or if none exist, involve them in creating metrics.

Secure agreement from contractors on the specific measures, and the frequency, manner and format of report on recruiting activities. Contract recruiters should know what information is most important to you and to any other manager/stakeholder involved.

Some basic metrics are:
(1) number of ads web postings, association and other postings per position;
(2) number of resumes reviewed from each source;
(3) number of cold calls made per position;
(4) number of employee referrals per position;
(5) number of telephone screens per position;
(6) number of interviews scheduled;
(7) number of interviews conducted;
(8) number of offers;
(9) number of rejections;
(10) number of acceptances and starts;
(11) time from initiation of a position requisition to new hire start date.

The data can be captured and reported in simple spreadsheet format, at the very least.

Factor #4: Provide contract recruiters with the tools and resources they need.

Be sure a computer, email, a voice mailbox, web posting capabilities, approval to use websites, space to interview, telephone lists, an organization chart, recruiting marketing materials, a desk, are all available to recruiters so they hit the ground running.

Facilitate introductions to hiring managers, and suggest each manager spend enough time with a recruiter to enable him or her to fully understand how positions to be filled fit in the department or project group.

Factor #5: Schedule time to meet with recruiters face to face weekly, initially, then agree on frequency thereafter.

Contractors need to be on site meeting with hiring managers and the human resources contact as often as need be to close openings. Although many recruiters are fully functional and effective from their home offices, planned time on site with internal clients for updates, sourcing ideas and brainstorming is necessary to keep activities on track. Email, voice mail and fax work for information exchange, but priority setting, problem solving and course corrections must be done face to face. Since managers are extraordinarily busy, selling the need for these meetings to them is critical to recruiter success.

Factor #6: Provide feedback to contract recruiters and solicit their ideas.

Contract recruiters will typically solicit “how am I doing?” feedback and appreciate knowing what or what not to alter.

Tell them what they should continue doing and what to change. Ask the same of hiring managers and relate their feedback to contractors, too. Before going too far down the recruiting assignment road review measurement data so that you and recruiters can quantify both efforts and successes.

In addition, solicit recruiting, interviewing, selection and hiring ideas from them. Many recruiters have supported a wide range of organizations in size, type, complexity and hiring volume, so they do have valuable experiences in what works best to attract and hire top talent.

Factor #7: Ask recruiters where they may need help.

If you have asked a contractor to do an informal compensation survey, for example, and then discover that the contractor has never done market research before, provide help directly, or offer the assistance of other human resource professionals. A contractor can more than likely do the job, but may need some specific direction in an area not part of his or her skill set and experience.

Factor #8: Expect questions from contractors.

Contractors do not know all about your business so you should get good questions about positions to be filled, business units, company goals, culture, managerial style, etc. so that recruiters are fully armed to answer questions from candidates.

Factor #9: Be sure contract recruiters do the jobs for which they were hired.

You can expect contract recruiters to be the solution to your recruiting challenge. You may see other projects and needs for which they might be helpful, but they could be distracted from their central focus, which is to reduce the number of openings you have. Try to shield contractors from politics and intrigue, and watch to see that they avoid participating in corporate drama.

Factor #10: As far as is possible, sweep away hurdles, hassles and barriers to recruiting progress.

Any unusual, unexpected interruptions to recruiting, constraints to success, or limitations on progress, should be discussed swiftly with contract recruiters. They understand organizational change and abrupt turns in direction. As contractors they typically know how to flex and dodge. Communication among all invested parties with new plans of action will usually keep everyone on track.

Although no formal guarantee accompanies these 10 critical success factors, my experience over the years indicates these 10 elements, if implemented and managed, contribute powerfully to contract recruiter effectiveness.

Opening in a Foreign Country; be careful

DARRYL A. WEISS
For more info… • news@globalhrnews.com

The world is getting smaller. Not in a geographical sense, but in a business sense. With the advent of e-mail, video teleconferencing, the Internet and e-commerce, businesses are no longer restricted to operations in a sole location. Improved trade, favorable tax rates, labor and centers of excellence have almost made it a necessity to have offices or strategic alliances in more than one country.
But how does one jump into the marketplace? The purpose of this article is to provide a framework of topics that is essential in doing business on the global level.

There is no replacement for having proper professional assistance in developing your global presence. This assistance will take the form of attorneys, accountants, consultants, etc. However, by doing the initial work themselves, businesses will be educated to the realities of the project, as well as reduce the number of billable hours to consultants and outside sources.

In making the final decision to expand globally, it is always a good rule of thumb to follow the old journalism axiom of the “5 W’s and H”: Who, What, Where, When, Why and, then finally, How? A more appropriate planning order and the questions associated with them might be:

Why are we undertaking this operation?
What are we going to do in this country?
Where will it be located?
Who needs to be involved in the planning and execution of this operation?
When do we want this to be in place?
How do we proceed to meet our objectives?
Once the questions have been answered, you have the infrastructure of your roadmap.
Early Planning
Prior to working through the issues of opening a business, there are three issues that need to be addressed as you prepare to go forward. First, what is the language spoken in the targeted country? Do they speak your language or will you need an interpreter? Requiring an interpreter will add expense to the transaction. Additionally, there is the matter of whether the interpreter understands what it is you are trying to get across in negotiations. There may be subtle nuances to language, or some things simply may not translate smoothly. So language, or choosing your translator, needs to be a topic of some concern.

The second issue is culture. Many a deal is blown due to one party not understanding the local cultures and ways of doing business. It may stem from something as simple as a handshake, to where business is transacted. Sending a female to conduct negotiations may doom a contract from its initial discussion. Not bringing a gift or bringing the wrong gift can be nearly as disastrous. Prior to going to the country, it is advisable to receive some instruction on cultural awareness to avoid most social faux pas.

The last issue, religion, may also be a part of the first two. Religion may play a part in when and where the discussions are held.

A brief lesson in local customs and practices is well worth the money to place negotiations on the right track from the onset.

Once you have your basic fundamentals in place, it is time to address the more pragmatic issues involved with developing a foreign entity.

Country Considerations
When selecting a country in which to do business, there are many considerations for the foreign investor. Has your country established diplomatic relations with the country?

The presence of diplomatic relations will generally be an indication that there are treaties in place for doing business. These treaties will have an effect on taxation, trade limitations, etc. It will also provide a local consulate or contact for the home country that can be used for making introductions, assisting in arranging meetings with certain government officials, and lend clout in the case of legal issues.

It is important to know whether there are any environmental regulations that will affect the way you do business. If you are opening a manufacturing facility, what are the restrictions on the disposal of solid and other wastes, air quality, etc.? Complying with local regulations may add more to the cost than you had planned. It may also require liability insurance for the company, and you as an individual for any violations.

Does the country offer any incentives to you for doing business? Many times a country will offer a company tax incentives, reductions in fees for building permits, licensing, etc.

Is there a limitation on imports or exports? Depending on the site chosen and the relationship to your home country, the limitation on what you can and cannot export or import may have an adverse impact on your overall business plan.

If you are going to build a new facility, there are a number of concerns prior to breaking ground. The environmental issues mentioned above may play a part in the certificate process. Additionally, what permits and inspections are required?

A final note about preliminary research will include the requirements for product registration. Is the country in which you are about to begin doing business a party to any treaties that acknowledge intellectual property, trademarks and copyrights?

Implementation
Once you have your initial results from above, you are ready to begin the preliminary steps to open your business.

Company Structure
Working with a local law firm will be an essential step in registering your business. You will have to decide how to structure the company. Will it be a wholly owned subsidiary, will it be a division, or will it be a public or closed corporation? The structuring will have repercussions downstream, as it will affect how you structure your accounting, intra-company pricing, etc.

The structure of the entity may be driven by its overall purpose. For example, if you are opening a company in the UK, and you need to obtain what is known as a “List X” rating for defense work, the company will need to be a registered company in the UK.

Additionally, are there any restrictions to the makeup of the officers and senior staff? In certain countries, you are required to have a local citizen as the Managing Director or as a member of the Board.

Financial Systems
Generally, there is an order to the flow of opening a facility. Many of the required procedures will follow a certain order that proceed like dominoes. For example, you need a company registration number to obtain a tax number. You need both the registration number and the tax ID to open a bank account. Finally, to set up your payroll and pension schemes, you need all three prior steps.

You will also need to determine the pricing strategy for inter-company transfers of products and services. While most countries allow a discount for the exchange of goods and services, the tax and treaty structures may limit you to discounts similar to those you would provide to a valued customer.

Banking
It is always better to be referred into a financial institution. Talk to your local bank and see whom they would recommend in the country of choice. If there is already a working relationship between the banks, there may be a better fee structure for transfers, loans, lines of credit, etc.

If you are trying to set up any sort of special procedures, or lines of credit, it will sometimes be worth your while to go to the bank’s main headquarters prior to visiting the local branch. Many times, if you are deviating from normal procedures, it has to be approved at the main office. The headquarters may not be in the same city where you are establishing your operation, but you will save time in the long run by gaining approval on your account structure, then having the headquarters refer you to the local offices. By going directly to the source of approval, you have eliminated one step.

Payroll
Many companies try to save costs by doing their international payroll in house. Unless your payroll department is conversant with the required Social Insurance contributions, pensions, taxes and other requirements of a foreign country, you are asking for trouble. Additionally, most U.S. payroll and HRIS systems cannot handle foreign data (addresses, currency differences, Social Insurance numbers, etc.).

Depending on the size of your operation, you may want to review the services of a payroll service or contact a local accounting firm that offers payroll as a part of its services. A service will contract to run the payroll, make the tax payments, bonus payouts, pension, and insurance withholding and contributions. They can also provide all year-end forms required for individuals to file their own taxes.

Insurance
A review of the country’s requirements for insurance is very important to the overall cost of opening and operating an office. First of all, is the company required to carry insurance? Next, what types of insurance and risk must be covered?

Before contracting with new carriers, you need to review the international umbrellas your home country’s insurance coverage provides. In some cases, you will be required to write the insurance in the new country. However, the more you can write under your current policies, the more cost effective it will be.

The same applies for your Director and Officer, Errors and Omissions, and Employment Practice Liability polices.

Taxation
Taxation is a key-planning component when planning the overseas operation. The company will need to be aware of how taxes are calculated, if there are federal and local taxes, and what the filing and payment requirements are. Is the tax year in the foreign country different from the tax year in the home country? Does the country require an audited statement at regular intervals from the company?

If your company’s fiscal year is different from the date of incorporation in the foreign country, may you change the accounting year to match yours to maximize accounting practices, standardize reporting, and require one audit instead of several?

From the operating standpoint, what allowances are there for depreciation and deductible items?

Is the country a party to any tax treaties that will guide your accounting and reporting structure? For example, where may business losses be deducted, in the home country or in the foreign country?

Human Resource Issues
The human resource function is one often overlooked until late in the process, yet it is one of the areas fraught with pitfalls for the unwary company. The issues of labor, employment, terminations, unions, benefits, social insurance, pension and compensation are heavily regulated. One of the best bits of advice to follow is to “stop thinking like a (fill in your country here).” A simple example of this is the offer letter. In the United States, most offer letters are one to two pages in length. They lay out the salient points of the offer, remind you that it is employment at will, and then close.

However, in many other countries, employment at will is not a reality, and there are statutory guidelines as to what has to be in the offer. There may be a requirement to provide each employee with a terms and conditions (T and C) letter that covers the entire employment relationship in some detail. The T and C’s may run as few as three to four pages for rank and file employees, to more than 20 pages for senior management.

I am reminded of the manager from the United States who was interviewing a candidate for a position in their German subsidiary. The manager extolled the virtues of the company’s benefits plan, the generous matching to the 401(k) retirement plan, the “generous” holiday plan, etc. At the end of the day, the individual was given the standard offer letter for managers in the company. He followed up with the Human Resources Department, asking what his benefits were, would he be paid monthly, from where would he be paid, did they know that German Statutory leave was greater than what they offered and, finally, where was his “real” offer letter.

Recruitment
After the question about the availability of labor has been reviewed, the next step is to recruit them. Recruiting methods will differ by country. Some areas of the globe do not have as ready access to the Internet as others.

When advertising in a foreign country, there are several considerations: the best day of the week to advertise, in what format should it be, and does it have to be in the local language.

In the U.S., the best day to advertise is Sunday. However, in different countries, there may be a different day for specific disciplines. For example, ads for computer professionals might run on Thursday, healthcare on Tuesday, and administrative professionals on Saturday. Working with your advertising agency should provide the best days for advertising.

The next issue is in what language the ad should run. If you are trying to hire for local sites, it should run in the local language. When having ads translated, you need to ensure that the message printed is the message you want, as some things do not translate well.

How and where will the responses be sent? Will you have a local repository or will they be sent to your home country? Remember, the resumes may arrive in the local language.

When and where will the interviews be held? Language may be an issue once again. Additionally, be aware of what questions you may and may not ask in that country. In the U.S., we are governed by strict guidelines as to the questions that may be asked. In various foreign countries, photos may be taken and any question is fair game, job related or not.

Notice periods also vary by country. In the U.S., we are accustomed to having our new hire begin employment within three to four weeks. Other countries have very stringent requirements as to the amount of notice required prior to leave taking. The notice period may be as little as 4 weeks, or as much as a year or more depending on statute and employment contract. In statutory cases, the employee may face civil fines for not providing the correct notice period. The waiting time for your new employee may have a direct impact on your new operation commencing operation.

Benefits
Benefits cover a wide scope of areas: time off, maternity leave, health and life insurance, and pensions. As illustrated in the example above, what appears to be a good plan for one country may not apply at all, or be well below the statutory minimum requirements in another country.

While a country may have a socialized medical system, many progressive companies are offering additional coverage to attract and retain employees. This practice used to be limited to management employees and above. However, in the increasingly tight market for technical talent, companies are offering extended benefits to the general employee population.

Health benefits will vary from country to country. A buy-up program allows an employee to be placed in a semi-private or private room over a ward. It may also offer the employee the choice of a treating physician, rather than who is on-call that particular day. In addition, in some places, they will receive preferential treatment, as the provider knows they will receive payment faster from a private insurer rather than the public plan.

Prior to making a foray into a new country, it is strongly advised that employers review the statutory benefits plans to assure the company will be in compliance with any contributions they are to make. It will also allow you to accrue the necessary expenses to cover various leaves of absence, illness and disability.

If the company is operating in more than one country, then global pooling might be attractive. Simply put, pooling allows a pooling of lives in more than one country to an aggregate number to receive a better pricing arrangement while providing the individual coverage required in each country.

Executives may also have an increased benefit package. Their fringes may include club memberships, drivers, cars, phones, computers, and topped up life, health, and pension contributions that are more tax advantageous than other forms of remuneration.

Compensation
One of the biggest mistakes a company can make is converting its local wages into the currency of the foreign location. Generally, it will translate very high or very low for the local market. Calculating salaries in a foreign country needs to be done in the same manner as at home: rank the job and analyze it in the local market based on requirements, education and years of experience.

Another pitfall is the number of months paid to an individual in a foreign country. Depending on the country, employees may receive between 13-17 months salary for 12 months work. The differences may be adjustments, bonuses, or just tradition. Many American human resources professionals have been caught short in salary negotiations because they did not realize until too late the number of months salary that was being negotiated.

Local surveys may be purchased from Human Resources organizations or international consulting groups.

In addition to base compensation, there may be other sums of money, or in kind options, that are more tax advantageous for the company to offer. For example, meal allowances, company cars, clothing allowances, or mobile phones might be included in the salary package. When you negotiate the base compensation, it is critical to know the full extent of the package.

One final note for multi-national companies is the location of payment. It has been a practice of some companies to spread the allocation of salaries for certain levels of management over a number of locations. For example, the executive is paid in U.S. dollars, French francs and Japanese yen. However, an initial review of the person may only reveal the pay in one of the countries. During salary negotiations with the new company, only the one country is discussed, the employee laments over how low paid he or she is, and the new company increases the pay commensurate with local ranges, while the employee still draws salary from the other sites. The moral of the story is to review all levels and locations of pay.

Stock plans, as part of compensation, will also vary from country to country. In some countries, the grant of options or stock may be taxable at grant, at exercise, at sale, or as a combination of all three.

When developing a global stock plan, the decision needs to be made as to which operating unit the stock will be granted. For example, the company is headquartered in the U.S. and opens a subsidiary in the UK – will the employees of the UK entity receive U.S. stock or will the UK entity issue its own stock?

Foreign stock may be granted in other countries; however, there may be issues with vesting (some countries do not allow for timed vesting). In a case where vesting in options is immediate, the U.S.- based company may want to modify the agreement to issue only the amount of options that would vest annually until the original grant number is reached.

Taxation may also be an issue to the issuing body. Prior to developing an entirely new plan, a full review of the parent plan should be done. In many cases, there is a provision to issue stock options to a foreign location. In such a case, all that is required is a modification of the parent plan exercising the clause to issue foreign stock.

The plan enrollment and grant documents will then need to be modified to include local rules and notifications. Local counsel should review the plan to ensure the proper format is followed and the tax implications are the most favorable for all parties.

Immigration
Immigration is an issue from many standpoints. It can delay the transfer of an individual by weeks or months, depending on the country and visa required. Immigration can also be an issue when moving a family where the spouse works. In some countries, a spouse may not work while accompanying the employee you have hired. The inability to work, in some cases, will lead to discontent and boredom at home, as well as financial hardships due to the reduction in a dual earning status.

The immigration timeline should be a major consideration in the overall business planning timeline.

Another consideration of immigration relates to third country nationals. You hire a national from Country A to work in Country B. However, part of the job duties requires entering Country C. Country C and Country B have treaties that allow free transit between borders, but Country A and Country C do not. Therefore, your employee may either not be able to enter Country C, or may have to apply for a visa, delaying the project.

Unions and Works Councils
The term Union has a very different connotation in the U.S. as compared to other countries. In most European countries, the employer will be working with either Works Councils or Trade Unions. The Unions, unlike in the U.S., are mandated by statute in most cases and play a major role in work determination, training, wage rates and redundancies.

I cannot emphasize enough the importance of working with the local Unions or Councils when opening an office. Failure to do so can result in fines, a lack of cooperation, and potential costly time delays until you begin to work through the proper channels.

Companies tend to underestimate the power of the Councils. A good example is in the case of data transfer of employee information. In Germany, even if the employee has signed a release to transfer the information, the local Works Council may override it and block the transfer of the data.

Data Privacy
Data privacy really came to the fore with the Directive 95/46/EC of the European Parliament and of the Council on the protection of individuals with regard to the processing of personal data, and on the free movement of such data.

The Directive applies to the processing of personal data wholly or partly by automatic means, and to the processing other than by automatic means of personal data that form part of a filing system or are intended to form part of a filing system.

The Directive has been ratified in local forms for most of the member states. For example, the UK enacted the Data Protection Act 1998 that required full compliance by October 23, 2001.

There are a number of safe harbor practices that will allow the transfer of data between the EU and other countries.

This rule, in particular, affects U.S.-based companies where the human resources department normally may keep copies of the international files, salary data, and other personal information for benefits purposes. Transfer of the data without the correct allowances and safe harbor conditions are a violation of law.

In some countries, the data a U.S. company may seek (dependents, etc.) may not even be kept on file by the company. For example, in Sweden, with its socialized approach to pay, benefits, pension, etc., the data normally collected in the U.S. is not kept on file and the requestor from the U.S. may get a terse response from the Swedish location on why such information is being requested. As mentioned above, a bit of cultural training can go a long way to establish positive relationships with the foreign office.

Conclusion
Proper planning, training and the right team will make the acquisition, merging, or opening of a foreign site much smoother. If the proper amount of time is placed into planning, research and execution, the number of unforeseen and unexpected issues will be minimal. They will still occur, but many will be non-issues, leaving time and the ability to deal with actual larger issues as they occur.

Mr. Darryl Weiss has been a frequent presenter to human resource organizations globally and has published on matters related to international human resources.