This paper contrasts recruitment and selection, training and development, and compensation and benefit practices associated with multinational and transnational strategies. In the transnational firm human resource management (HR) takes on a new strategic role. Whereas integration between organizational units can be achieved through organizational structure for a multinational firm, a transnational firm’s organizational units have to be integrated through human resource processes. Implications for the role of HR and planning issues for the successful implementation of a transnational strategy are discussed. Five planning propositions encompassing a four-phase model to plan a successful implementation of a transnational strategy are presented.
 
 
 
 
 
 
 
 
 

In the last decade, increasing competitive pressures resulted in the need for businesses to consider global strategies - to treat the world as an undifferentiated worldwide market place. Such "globalization" strategies involve the establishment of worldwide operations and the development of standardized products and marketing. A global firm’s operations are geographically and organizationally dispersed. The integration of globally dispersed activities has been a challenge for the management of these firms. Porter (1987) suggests that firms operating in a global industry must in "some way", on a worldwide basis, integrate their activities to capture the linkages among countries. Ultimately, the "way of integration" depends on the strategies and structures the firm chooses. The strategies and structures imply how the firm is divided up (differentiated) and how it is united (integrated) (Dowling, Welch, and Schuler, 1999).

The globalization process is evolutionary and consists of four distinct stages: international, multidomestic, multinational and transnational or global (Adler and Ghadar, 1992). During the first three stages, firms effectively integrate business units through structural mechanisms (e.g., Adler and Ghadar, 1992; Bartlett and Goshal, 1991). Firms in the transnational stage may face serious challenges because they may be organizationally incapable of carrying out the sophisticated strategies they have developed (Bartlett and Goshal, 1992). Since these firms become increasingly complex, their management begins to replace its traditional focus on issues of strategy and structure with a focus on the criticality of managing people and processes. Thus, the new global organizing paradigm is centered on management process and not on organizational structure and procedures (Pucik, 1997).

In particular, Pucik (1997: 163) suggests that "this paradigm symbolizes a shift away from traditional and static structural solutions to global business challenges, towards an acceptance of the global organization as a fluid and evolving dynamic network." As a result, the key organizational task becomes to capture individual capabilities and motivate the entire organization to respond cooperatively to a complicated and dynamic environment. This is achieved through human resource processes and, therefore, human resource management becomes an essential element in the globalization process.

In this paper, we contrast the recruitment and selection, training and development, and compensation and benefit practices associated with multinational and transnational strategies. This descriptive analysis will show that, in contrast to a multinational strategy, the practices associated with a transnational strategy imply an essential role for human resource management (HRM). The successful implementation of a transnational strategy requires that human resource processes replace organizational design as the primary mechanism for task accomplishment, coordination and control. Based on these findings we will discuss specific issues related to planning and implementing a transnational strategy.

A "multinational" strategy is generally chosen by firms that face a situation of international development where products and services become saturated in international markets, the technological innovation that drove operations overseas dwindles, prices drop and cost containment becomes a key to success. Reductions in cost, through rationalization of operations to sites where the factor costs of activities are minimized, create a culture of global "cost-centrism" (Adler and Ghadar, 1992). Organizations applying this strategy tend to continue using global product group structures with reductions in operations focusing on regionally low cost factor locations.

The "transnational" strategy is characterized by a combination of minimal global costs and significant customization of products and services to meet the demands of a wide range of increasingly sophisticated customer groups around the world. Research and development costs grow and manufacturing and distribution are based on balancing costs and differentiation for local markets - so called "mass customization" (Jones, 1998). This balance between cost control and local customization is not accomplished by structural control. Rather, control is achieved by a "geocentric" culture, a strong international culture characterized by tightly integrated cadres of flexible global managers. Together, these managers hold a set of globally-balanced values and perspectives that create the socialized "mind matrix" that allows the transnational strategy to function (Bartlett and Ghoshal, 1993). Since this "mind matrix" depends entirely on the global managers, careful selection, in-depth career development activities and experiences and appropriate compensation practices become essential to the success of the firm.

In the following sections, we present a descriptive analysis of the human resource practices associated with multinational and transnational strategies.

Recruitment concerns the sources and methods used to generate a pool of applicants to fill job vacancies. The selection decision focuses on the criteria and selection methods used in choosing among applicants. These activities clearly differ for multinational and transnational firms.

Multinational Strategy: Bartlett and Ghoshal (1991) describe a multinational firm as a "decentralized federation." The dominant strategy of these firms focuses on developing positions in key markets worldwide and managing operations as a portfolio of independent businesses. This orientation and the associated structure of informal links between headquarters and subsidiaries are similar to Perlmutter’s (1969) polycentric or host-country orientation. Since subsidiaries function independently, local nationals or host-country nationals (HCN’s) usually manage them. These HCN’s are seldom promoted to positions at headquarters. The recruitment and selection of HCN’s is the responsibility of the subsidiaries. The human resources function at the firm’s headquarters interferes only if necessary and primarily performs a monitoring and control function (Dowling, Schuler, and Welch, 1994).

Multinational firms may have an international division that is staffed by parent country nationals (PCN’s). These are generally recruited from within the firm. Finally, PCN’s may also be used to staff management positions in subsidiaries, however to a much lesser extent than in the case of an international or multidomestic strategy. Expatriate assignments may also be used for managerial development purposes if costs are not excessive.

Since subsidiaries and the parent company operate quite independently, the selection criteria and methods used differ across the firm. Selection decisions have to be consistent with their cultural and legislative context. With respect to PCN’s, the emphasis is on identifying employees who can direct the daily operations of foreign subsidiaries, supervising transfer of managerial and technical know-how, communicating corporate policies, and keeping headquarters informed (Pucik, 1993). Because of the relatively high failure rate of U.S. expatriates, the selection of expatriates has received much attention (e.g., Mendenhall, Dunbar, and Oddou, 1987). Relevant issues concern the use of selection criteria and measures that capture the applicant’s and the applicant’s family’s cross-cultural adaptability in addition to technical competence measures.

Transnational Strategy: Within the transnational firm, resources and decision-making centers are dispersed among the various affiliates. Specific foreign affiliates may be worldwide centers of expertise along a certain dimension. Transfer of knowledge is effected through a high degree of integration and interdependence among all organizational units. This system may also be referred to as an "integrated network" (Vernon, Wells, and Rangan, 1996). According to Perlmutter (1969) transnational strategy is consistent with a geocentric or world orientation. Pucik (1997) explains that transnational or global managers are defined by their "state of mind" whereas expatriate managers are identified by location.

The source of applicants to fill vacancies in a transnational firm is not defined in terms of geographic or national constraints. Recruitment strategies focus on the global labor market. Talbott (1996) emphasizes that global firms must recruit people who possess the skills needed to function well in a global environment. Only then, the firm is able to develop a global workforce where employees support the global philosophy of the company. Every recruitment is a global effort (Barham and Oates, 1991).

A geocentric orientation values ability over national origin. Technical competence, therefore, is a primary selection criterion. Equally important is that each employee in the firm has a global mindset (Talbott, 1996). Thus, in screening and evaluating applicants, consideration must be given to an applicant’s "level of global awareness."

For management employees, flexibility and team-orientation are important criteria as well as global competencies. Pucik (1997: 165) defines a transnational or global manager as an "executive who perceives global competition as an opportunity; has hand-on understanding of global business and an ability to work across organizational, functional, and cross-cultural boundaries; and is able to balance the simultaneous demands of global integration and local responsiveness." In selecting transnational managers, criteria and measures that capture these attributes are used. It has been suggested that strategic awareness, global mobility, a sensitivity to different cultures, a capacity for international teamwork and language fluency may be appropriate indicators (Barham & Oates, 1991).

Foreign assignments become a core component of the organizational and career development process. "Transpatriates" from all parts of the world are sent to all other parts of the world to develop their worldwide perspective and cross-cultural skills (Kobrin, 1994). Kobrin (1994) further suggests that it is the objective of a geocentric orientation to gradually eliminate the very idea of a home or host country. The "geocentric" culture of the transnational firm requires a cadre of managers with career experiences that allow them to combine technical functionality, detailed product knowledge and wide-ranging cultural insights (Barham and Oates, 1991).

Conclusion - Recruitment and Selection: The shift from expatriate to global managers associated with the move from a multinational to a transnational strategy reflects the shift from a mind-set based on national and cultural differences to one based on viewing the world as one entity. Recruiting and selecting managers and other employees with a global mind-set is essential to the success of a transnational strategy.

This HR process is compared concerning training purpose, focus, strategies and methods, as well as content for the two strategies.

Multinational Strategy: Purpose - Training serves as a secondary support to the primary control devices of financial control and budgeting, organizational design and structure and the highly formalized strategic plan. Implementing this strategy requires managers to develop a cognitive understanding of potential issues and problems while maintaining the status quo - namely, enhancing the efficiency of existing operations (Tichy, 1993). Issues and problems concern cost reduction, sources of relative production efficiency, and the interpretation of roles, policies and rules.

Focus - Training and development is largely restricted to local and regional efforts (Briscoe, 1995; Dowling, Welch, and Schuler, 1999). Only limiting funding is available for more globally complete, and, hence more expensive, training investments. The only occupational group that may enjoy more extensive global training opportunities is the financial control managers, those auditors and controllers so necessary to track costs and revenue flows across geographic boundaries (Lessard, 1997).

Strategies and methods - Multinational firms provide relatively discrete training activities to individuals or small groups over short time periods. Applying low-risk simulation activities to enact behavioral changes on a superficial level, the goal is to develop skills relevant to the focal cultures of interest (Tichy, 1993). Multinational training and development is characterized by extensive use of case-studies or simulations in classroom environments, language training, country handbooks, in-company counseling on legal and financial topics, meetings with repatriated managers and the like (Briscoe, 1995; Tichy, 1993).

Content - So-called "hard" issues - budgeting, manufacturing, marketing, distribution, headcount, finances, etc., dominate multinational training curricula (Tichy, 1993). This is not surprising given the cost containment-rationalization emphasis of multinational strategies. Efficiency of operation is at a premium.

Transnational Strategy: Purpose - The goals for training in a firm with a transnational strategy are more complex and challenging than for the multinational firm. The ultimate goal is to identify and develop a cadre of managers able to define and solve major organizational problems and to transform significant organizational processes and systems (Tichy, 1993). The transnational "mind matrix" or mind set requires collaborative, multi cultural decision processes in contrast to the financial, structural and planning forms of control under the multinational strategy (Bartlett and Ghoshal, 1995; Sundaram and Black, 1992). This bias for collaborative innovation is central to any transnational training process.

Focus - Transnational firms are characterized by a top level, strategic focus on global skills development (Evans, 1992). Training focuses on ensuring that managers are efficient in global exchanges and flexible to local conditions. All managers are expected to develop global training and development experiences (Dowling, Welch, and Schuler, 1999).

Strategies and methods - Transnational development strategies consist of organization-wide development over long time periods with a focus on gaining significant experience in real settings. The intent is to enact deep, fundamental changes in the ability of the collective firm to truly understand and solve complex global problems – "action learning" (Tichy, 1993).

Given the loft goals and more complex and difficult strategies of transnational training, methods are more difficult to describe. Tichy (1993: 209) describes "compressed action learning . . . [as] . . . intense cross cultural problem solving which requires multi cultural teams, a faculty that is transcultural as well as multilingual, and breaking free of the classroom into real cross cultural settings . . . Executives are required to deliver with real stakes and real risks involved." Exposing trainees to real risks in real settings not only provides readily transferable individual and group competencies, it also contributes to selecting those individuals ready to take on more critical leadership roles to support the global corporate culture.

Briscoe (1995) describes transnational development methods as a systematic plan of team-based job assignments of adequate variety, challenge, and length that include multiple functional, product, and country experiences. The goal is to ensure that individuals learn how to achieve results through other associates, colleagues who are possibly more technically qualified in the particular assignment and who may be from other countries and cultures.

Content - Transnational training must address both "hard" issues and "soft" issues. Soft issues concern values, culture, vision, leadership style, and innovative behavior (Tichy, 1993). Particularly critical is the issue of innovative behavior since transnational strategy requires innovative teams.

Conclusion - Training and Development: Training and development of all employees in the firm is essential to the success of a transnational strategy. Given the difficulties in hiring employees with a global mindset already in place, training and development processes must be provided to enhance this critical competency (Roberts, Kossek and Ozeki, 1998).

Multinational Strategy: Most multinational firms have developed a "Balance Sheet" approach to compensation practices. To create a foreign compensation package home base salary, benefits etc. are adjusted by incentives for housing, unfamiliar or uncomfortable surroundings, relocation costs, training allowances, and equalization adjustments such as COLAS, tax equalization allowances, benefit adjustments (Briscoe, 1995; Schell and Solomon, 1997).

At the very least the balance sheet is maintained under the multinational model, but incentives and premiums are reviewed and reduced or eliminated for PCN's (Briscoe, 1995). Expensive PCN's are replaced with HCN's and Third Country Nationals (TCN's) from cheaper labor markets to further reduce costs. Consolidation of operations, from countries to regional hubs, is paralleled by the growth of "regional" pay systems. Here, the regional system is used to replace higher paid HCN's with TCN's, or, as the case may be, higher paid TCN's with HCN's within a certain region.

Costs are also contained by the use cafeteria-style benefits programs, replacing cash payments with benefits and perquisites which provide more utility for the employee at significant tax savings for both the employee and the organization (Briscoe, 1995). This centralization of benefits such as company-provided housing, company cars and insurance allows firms to more efficiently direct compensation to those areas that provide the most incentive value while maximizing newly acquired knowledge about local tax codes.

Finally, performance based incentives begin to replace environmental incentives. Financial control becomes increasingly developed and incentives for foreign assignments are replaced with more direct measures of economic performance (Phatak, 1995). Transfer pricing activities directed at avoiding taxes or shifting costs, however, make the accurate assessment of performance somewhat problematic (Lassard, 1997).

Transnational Strategy: The success of a transnational strategy has less to do with structural innovations than with developing an often radically different organizational culture (Bartlett and Ghoshal, 1995; Jones, 1998; Lawler, 1990). The new culture calls on decision makers to simultaneously balance functional, product and geographic/cultural concerns in all activities - the "mind matrix" of internalized control (Bartlett and Ghoshal, 1993; Tichy, 1993). In this culture, structural forms of control defer to social control and compensation takes on primary significance (Bird & Beecher, 1995). Compensation systems at this phase must " . . . replace the traditional cost of living concerns with a quality of life or quality of career focus" (Briscoe, 1995: 120). Four general alternatives, variations on the tension between global standardization and local customization, are distinguished (Wright and Snell, 1998). First, separate balance sheets for PCN's, HCN's and TCN's are replaced with a uniform, world wide system (Phatak, et al., 1987). "Direct pay is based on global rather than parent or host systems resulting in the creation of cultures or mind-sets that are different and distinct from the cultures and values of competing firms" (Milkovich and Bloom, 1998: 19).

Secondly, a two-tier system may be developed. A set of "international" occupations, set to a global uniformed system, and a separate "local" classification system, for lower level technical or operational occupations, are presented as an option (Briscoe, 1995; Harvey, 1993).

Thirdly, a transpatriate compensation system that results in two levels of compensation – one local and one based on employee origin – may be developed. Advocates of this system present the advantages of minimal disruption in the employee’s "home" standard of living while reducing the shock of reentry to the home culture. The transpatriate system is based on a three step process. First, the cost of maintaining a standard of living in the country of assignment similar to that of the country of origin is assessed. Second, a "country of origin" cost of living is determined and subtracted from the employees base salary resulting in a "disposable income" component, paid to the employee in their country of origin’s currency. Finally, the cost of living component from step one "is paid to the employee in the currency of the country of assignment" (Black, et al., 1999: 196). This dual currency approach reduces changes in an employee’s standard of living, insulates transpatriates from some currency fluctuations by diversifying the currency portfolio, communicates both local and home concerns to the employee and reduces serious inequities between transpatriates and host or third country coworkers (Black, et al., 1999: 197). Flexibility within an individual’s pay is stressed by this system.

Further, the flexibility needed in a transnational firm may be created through a compensation system that consists of three levels: core compensation, customized or crafted compensation, and choice compensation. "Core" compensation is the same for all employees, reinforcing a corporate global mind set through cash, basic benefits and other rewards. "Customized" or "crafted" compensation is controlled at a regional or business unit level and is responsive to local or regional market conditions and may be used to provide housing assistance, flexible work scheduling, stock options bonuses or other developmental help. "Choice" compensation is controlled at the local level and allows employees to select, as in cafeteria plans, a series of pay options such as educational leaves, stock purchases, tax deferral options, and base/bonus mixes (Milkovich and Bloom, 1998).

Transnational firms may also find that the development of functional, product and cultural knowledge as well as long term career development is facilitated by knowledge based pay systems. Rather than paying for jobs, the firm compensates individuals for obtaining and applying competencies in these three critical areas (Lawler, 1990; Prahalad, 1993). This pay system reinforces the mind matrix, explicitly ties together career development and rewards, and assists the growth of a global cadre of flexible leaders within the firm (Bartlett and Ghoshal, 1995; Kets de Vries and Mead, 1993).

Conclusion – Compensation: The critical issue for multinational firms is how do we impose rigorous cost containment without losing the irreplaceable resources, be they Parent, Host or Third Country Nationals, we have worked so hard to develop? For the transnational firm, the interaction between the compensation system and the employee is more holistic – encompassing both economic and noneconomic exchanges - tightly coupled and interactive (Bloom & Milkovich, 1998). A major difference from the earlier international pay systems is that under the transnational strategy the frame of reference is a unified global perspective. Gone is the old, parochial parent nation's value system as the driver of pay comparisons and incentive allocations. In its place is a more flexible, interrelated system of globally based, yet locally responsive pay (Milkovich and Bloom, 1998).

Table 1 presents the comparison of HR practices for multinational and transnational firms.
 
 

                    Multinational Strategy                                                Transnational Strategy
 

Strategic Issues: Organizational Design HR Role: Support Structures, Strategy and  Status Quo Analysis: Job Emphasis Individual Functional Emphasis	Strategic Issues: HR Practices HR Role: Leads Global Corporate Innovation     Analysis: Person/Cadre Emphasis Career Development Emphasis
Recruitment and Selection:     Decentralized Federation Local National Recruitment Local National Selection Expatriate Failure Concerns	Recruitment and Selection:      Integrated Network Recruitment for Global Skills Selection Based on Global Mindset,  Technical Skills and Intercultural Team Skills Transpatriate Opportunity Focus
Training and Development:     Goals: Improve Individuals’ Cognitive  Understanding-Implement Existing Strategies Focus: Local and Regional Except for  Financial Control Managers Strategies: Individual, Small Group,  Short Term, Low Risk Behavioral Changes Specific to Issues At Hand Methods: Case Studies, Simulations, Lectures, Language Immersion, Country Handbooks, In Company Counseling     Content: Hard Issues	Training and Development:     Goals: Identify and Develop a Cadre of Managers to Transform Processes Via Innovation Focus: All Managers Expected to Have Global, Collaborative Mindset Strategies: Organization-wide, Long Term, High Risk Immersion, Deep Changes in Group Problem Solving and Innovation Methods: Compressed Action Learning, a Pattern of Team Based Job Assignments in a Variety of  Settings Content: Hard Issues and Soft Issues
Compensation and Benefits:     Performance Rather Than Location Incentives,  Regional Pay, Low Cost Labor Shift (PCN-HCN-  TCN), Rationalization of Benefits, Performance Pay	Compensation and Benefits:     World Wide, Knowledge Based Pay Systems, Renegotiation, Complex Benefit Administration. Career/Development Pay, Complex, Personalized Pay

 
 
 

In a transnational firm the interactions between the HR processes discussed above must be considered. Control, focus and specific practices need to be combined in a pattern that supports the implementation of a transnational strategy. In a transnational firm, rather than a focus on an individualistic, job-based view of HR, we must look to team based, person based planning, recruitment and selection, training and development, and compensation practices (Mahoney, 1989; Pearlman, 1980). The unit and level of analysis should follow the shift in strategy. A unified, seamless plan for personal or cohort career development that intertwines all HR practices must replace discrete, job-based subprocesses and practices associated with multinational strategies if HR is to be relevant for global firms.

In a multinational model the "job" is the central focus or exchange area for coordination between HR processes. If for example, employees in the recruiting and selection process and training and development processes "dumb the job down" in qualifications for recruits to make recruitment easier, training will have to pick up the slack or expand the training requirements. In a transnational model, decision-makers for HR processes are free to engage in flexible discussions on how to build individual or group experiences that provide a global perspective and global capabilities.

Furthermore, we must "sweat the details" in a way we may not have in the past. Implementing a strategy as complex and dynamic as the transnational strategy requires more than lofty sounding paradigm shifts and strategic realignments. Specific and concrete HR practices must alter the lives of employees if the new strategy is to be successful (Ulrich, 1997). There is no safety net of detailed job descriptions, bureaucratic hierarchies, strategic planning staff gurus and budgetary straight jackets as in the multinational firm. With primary roles come primary responsibilities.

Firms pursuing a transnational strategy must negotiate the shift from structural to human resource based control. Human resource processes dominate as integration mechanisms for the transnational firm and replace the primacy of structural control with culturally-based social control (Lawler, 1996; Ouchi, 1981). HR may adopt a "facilitator" role (Bird and Beechler, 1995), an "integrative" orientation (Taylor, Beechler and Napier, 1996) or "value based" strategies (Sundaram and Black, 1992). A strong global culture, tightly woven recruitment, development and compensation programs for the cadre of administrative leaders and a sophisticated human resources information system are the mechanisms to coordinate transnational firms. Recruitment and selection, training and development, as well as compensation and benefits must be capable of changing "individual attitudes and mentalities" as well as "interpersonal relationships and processes." These processes will set the stage for later and secondary changes of "formal structures and responsibilities (anatomy)" in the firm (Bartlett and Ghoshal, 1995: 484-487).

In multinational firms, HR strategies are nothing more than the implementation of recruitment and selection, training and development, and compensation and benefit processes within the confines of a defined job listing. Strategy leads to structure, structure devolves into a series of prescribed jobs and those jobs must be "filled" through HR processes (Egelhoff, 1988). The overall structure devolves down to discrete job-based assignments and then HR processes do little more than ensure that activities in job descriptions do indeed happen. By contrast, the transnational strategy is directly linked to a set of strategic HR capabilities (Schuler, Downing & DeCieri, 1993). These personal and cohort capabilities place a premium on HR "flexibility."

Four areas of concern immediately face planners attempting to prepare the firm for a transnational strategy.

Form and Timetable: Choosing the form and timetable of movement to a transnational strategy – slow migration or rapid exodus – is the first decision to be made (Lawler, 1996). Four alternatives are presented from least risk to most risky. The first option is slow, incremental organization-wide migration to the transnational ideal. The second option is a pilot group conversion, with such units consisting of some likely combination of existing geographic, product and functional subunits, with the expectation that the gathered information will be disseminated through other groups as they are in turn converted. The third alternative is a new venture group, an experimental self contained colony set up to learn how the mind matrix culture and process differ from existing forms of structural controls - an expanded "greenfield site." The final alternative is an organization-wide fast track conversion to the transnational ideal – a cultural revival expected to sweep through the firm.

The pace of conversion depends on a variety of factors. One significant factor is the motivation to change. Are we in the position of an industry leader – proactively changing to capture the inherent dual advantages of low cost and customization (Adler and Gahadar, 1992)? Or are we followers – reacting to competitors who have already moved toward a transnational model? As leaders we may enjoy the option of less risky incremental conversion. As followers we must balance the risks of fast track conversion against the potential costs of maintaining a multinational strategy.

Level or Depth of Conversion: A second issue relates to the level or depth to which global competencies are sought for members of the firm. On one extreme, everyone – from the telephone-receptionist to the CEO – is recruited, selected, trained, developed and compensated according to the mind matrix model. On the other extreme, the global perspective may be carried by a limited number of cadres made up of executives and key functional personnel. This small group interacts with the majority of employees who are selected for limited functional, product or regional-cultural expertise. We may call the first, wide-spread approach "deep" or "intensive" and the second, more limited approach "shallow" or "focused". With systems control capabilities there is no reason to believe that every group the firm is equally significant or each group must follow the same HR strategy (Snell, 1999).

Information Requirements: Human resource information systems must be able to capture and extract information related to individual, cadre and organizational capabilities. Individual capabilities and experiences must be mapped for career tracking, training and development as well as determining the status of "crafted" and "choice" compensation elements. Cadre status reports are required to determine existing vs. required cadre development activities as well as track groups with various forms of combined work experiences. Organization-wide competency assessment is required to capture the overall person and cadre capabilities in a HR planning sense. The development and installation of this form of database is a significant task (Peppard, 1999).

HR and Strategic Planning: Transnational strategies require an immediate and significant shift in organizational culture and the political power and status of HR within the firm. Human resource executives must have a seat at the strategic planning table equal or superior to any other functional presence (Clark, 1996; Taylor, Beechler, and Napier, 1996). A global cadre of executives must be formed before any other steps are taken, otherwise functional infighting at the top will schizophrenically tear the "mind matrix" apart before the strategy can be implemented.

The four issues presented above, daunting as they appear, can by systematically dealt with. We present five propositions related to the implementation of a transnational strategy. The first proposition concerns the overall understanding of the type of planning involved for the implementation of a transnational strategy. The four remaining propositions relate to distinct, however, overlapping phases in the implementation process. Figure 1 presents the four phases.
 
 

Planning the conversion to a transnational strategy is a customized, complex, interactive and non-routine activity.

Throughout this paper we have presented the complex nature of transnational operations as well as the largely discontinuous changes from a structurally-embedded, conservative, multinational strategy to the more personally-based and open transnational strategy. The characteristic of complex dynamism continues in the planning process. We cannot prescribe specific and universally relevant steps to move the firm to transnational capability. Rather we suggest four, overlapping phases. Events, discoveries and activities at any given phase may force us to "back up" and revisit earlier phases.

Additionally, the transition process is unique for any given firm. This customization is essential to successful implementation and yet frustrating to academicians and practitioners seeking a universal set of specific truisms. Identifying the planning process as a form of service technology and drawing on early work by Charles Perrow, we may describe transnational planning as a "nonroutine" service technology (1967). There will be a large number of exceptions – new tasks or problems to be encountered at each of the four phases. In searching for solutions to these problems we will not be able to draw on programmed responses – they are not readily analyzable. Decision-makers will be forced to draw on intuition, insights and intensive decision processes to solve problems as they occur.

Phase one of the Four-Phase Model consists of selecting and developing an executive cadre with global experiences, competencies and capabilities.

Given the risky, discontinuous nature of transnational strategies, this first phase is critical. The selection and formation of the first cadre is critical for several reasons. First, the cadre must lead by example. The firm is in uncharted waters that are radically different from the status quo. Moving from structural to clan control while increasing global capabilities requires ongoing examples. Second, only by going through global assignment cycles as individuals, developing transnational cadre norms, and working through the realities of strategic planning, can the executive cadre truly understand the issues faced by members of the organization as they adjust to the mind matrix model (Black, et al., 1999: Chapter 11). Third, the changes in power, authority, values and culture in a move to the transnational strategy are going to be significant. Only a real commitment by those with the power to make changes stick will overcome forces in opposition to change. Finally, a visible group of transformational leaders – not technocratic managers – are required to show the courage necessary to adventure in these new fields. Uncharted, complex and discontinuous environments require the form of control only personal leadership can provide (Ghoshal & Bartlett, 1997; Lawler, 1996; Ouchi, 1981).

However, with the limited number of top level executives who have in-depth global experience, this first phase may be the most difficult and time-consuming phase in the implementation process (Black, et al., 1999). It may be problematic to find a group of individuals with top level executive experience that either individually balance product, functional and cultural competencies or complement each others’competencies as a whole.

Phase two consists of a global competency audit of the firm and its environment.

Once the leadership team is in place a firm-wide, global needs analysis must be undertaken to uncover the capabilities of the existing human resource base. Internal capabilities, on the individual, team, unit (functional or geographic) and firm levels, must be assessed to discover how much of the "mind matrix" is already in place and specifically where it resides.

Concurrently, Human Resource Information Systems (HRIS) capabilities must be audited. Many U.S. based global firms have interfaced either customized or vendor supplied global compensation or selection systems with domestically-based, integrated HR systems (e.g. Peoplesoft or SAP)(Lawler & Mohrman, 1999; Martinez, 1999). Other firms have custom developed specific global processes, such as performance appraisal, expatriation-repatriation or compensation, that may or may not be connected to a corporate decision support system (Black et al., 1999). For most firms developing an integrated, global decision support system will be a critical, time consuming and involved process (Peppard, 1999).

Also, in this second phase the availability and potential sources of global competencies outside the firm should be explored. Given internal capabilities, should individuals be sought, teams or divisions of competitors approached or entire firms considered for joint ventures or acquisition? Do we acquire missing global competencies via internal growth or external acquisition (Eyes, 1999)?

Phase three consists of a series of strategic decisions about the form, pace and depth of change as well as the use of outside partner and evaluation criteria.

As discussed in the ISSUES section firms have choices concerning the form and pace and depth of implementing a transnational strategy. These choices are made and implemented in this phase. The form and nature of relationships with outside partners, be they individual hires, joint ventures or mergers and acquisitions are also decided and implemented in this phase (Bartlett, 1992: Snell, 1999). Missing competencies can be gained quickly by external acquisition, however, given that the firm is now culturally-driven, "culture shock" is a possible problem for individuals acquired from the outside (Grossman, 1999; Leonard, 1999).

Finally, the set of evaluation criteria to determine if balance between functional, product, and geographic capabilities is being accomplished must be developed and disseminated. Individual, group and organizational norms, goals and standards must be created now if we are to maintain balance and gather forward momentum (Ghoshal & Bartlett, 1997).

Phase four consists of the intense, ongoing evaluation and adjustment of the balance between product, functional and geographic capabilities and interests as well as the balance between local needs and global concerns.

The transnational firm should use HRIS and global decision support systems to do more than evaluate whether performance criteria are being met in a timely manner. It is equally important in the short term, and more important in the long term, to track and adjust the constantly shifting factors of productivity and competitiveness and balance global and local capabilities at a reasonable cost. The promises of the mind matrix revolve around the ability to deal quickly and correctly with novel, complex and inter-related problems as they arise. We must realize this promise by ensuring prompt evaluation and adjustment to ever changing conditions (Ghoshal & Bartlett, 1997). Available feedback must be used quickly by global managers to close loops, adjust practices, listen, learn and revise decisions as conditions warrant (Adler & Ghadar, 1992; Bartlett & Ghoshal, 1993; Evans, 1993). Individuals and cadres perform on a tightrope by balancing local and global interests while constantly renegotiating relationships to take advantage of low costs and emerging markets (Welch, 1994).

The implications for human resource management of a shift to a transnational strategy were discussed in detail. Such implications must be seen in their entirety. It is the combination of new, more complex recruitment and selection, training and development, and compensation and benefit practices as well as the new pivotal role HR plays that will ensure the successful implementation of a transnational strategy. Changes in both strategic perspective and specific practices should reinforce and support each other if the promises of global perspective and local competitiveness are to be realized.