Reference number 232
Allen D. Engle, Sr.
Eastern Kentucky University
215 Combs Classroom
Building, 521 Lancaster Avenue, Richmond, KY
40475-3102 USA
859.622.6549 859.622.2359 (fax) allen.engle@eku.edu
Mark E. Mendenhall
University of Tennessee,
Chattanooga
423.755.4406 423.755.2329 (fax) Mark-Mendenhall@utc.edu
Richard L. Powers
Eastern Kentucky University
215 Combs Classroom
Building, 521 Lancaster Avenue, Richmond, Kentucky 40475-3102 USA
Eastern Kentucky University
859.622.4985 859.622.2359
(fax) cbopower@acs.eku.edu
and
Yvonne Stedham
University of Nevada, Reno
University of Nevada, Reno -
Mail Stop 028, Reno, Nevada 89557-0016
USA
775.784.6993 ext. 315 775.784.1769 (fax) ystedham@scs.unr.edu
Introduction
Over the past thirty years, the conceptualization of
global strategies by multinational corporations has developed dramatically
(Adler, 1997: Ghoshal & Bartlett, 1997; Perlmutter, 1969), and the
implication of these global strategic models for international human resource
(IHR) processes and practices has been no less dramatic (Black, Gregersen,
Mendenhall & Stroh, 1999; Dowling, Welch & Schuler, 1999). Despite these important developments,
however, major discontinuities between these global structures and the IHR
processes that are required to implement them remain.
A significant and unresolved
issue involves the implications of the inherent differences between
multinational strategies and transnational strategies for IHR processes.
Multinational strategies employ organizational design and structure as the
primary control devices to implement the strategy, and advocate the use of
job-based IHR practices to support structural controls. In transnational strategies, however, these
roles are reversed and personal competency-based IHR processes and practices become
the dominant control devices in support of a more nimble “mind matrix,” while
jobs and structure act in secondary support roles (Adler & Ghadar, 1992;
Bartlett & Ghoshal, 1993; Engle & Stedham, 1998).
These fundamental shifts in
primary form of control, unit of analysis, and the performance requirements of
the firm require theorists and practitioners alike to reconceptualize all the
major aspects of IHR when dealing with transnational strategies. Traditional, structurally-embedded,
job-based IHR processes are inadequate to address the complexities and pace
created by the need to “globally” balance an in-depth local understanding with
the orchestration of global capabilities and resources (Ghoshal & Bartlett,
1997). A significant lag has resulted
between the IHR requirements of a transnational strategy and their
realization. This lag requires that
researchers and practitioners revisit IHR activities and construct new
frameworks in support of these transnational requirements. This paper is an attempt to add to, and to
stimulate the further development of this important dimension in the field of
international human resource management.
The
purpose of this paper is to offer a conceptual framework that attempts to
bridge the aforementioned lag between strategic need and IHR support
practices. The paper will first present
the idea of "competencies" being an alternative to the traditional
construct of "jobs" in the transnational context, and will argue that
it is the appropriate unit of analysis for transnational IHR processes. Next, a model consisting of three balanced
transnational competencies (cultural, functional and product competencies) will
be presented; this discussion will then be followed by a delineation between
the three competencies and competence in the process of acquiring these three competencies. The paper will conclude with a series of IHR applications of the
model in the areas of planning, recruitment and selection, training and
development, executive leadership, and strategic control.
Why Competencies, Or "Are You Experienced?"
A key to the
reconceptualization of IHR activities for transnational modes of organizing
relates to the necessity of moving away from the construct of "job"
to that of "competency" as the ideal focus of analysis in IHR policy
decisions. Before discussing this
notion of "competency," first the traditional approach to IHR
decision-making in the multinational context will be reviewed.
In multinational firms the
dominance of structure as the primary device to implement strategy on the macro
level is normally reflected by the dominance of job-centered IHR processes on
the micro level. The goal of the
multinational strategy is to create a strategy – structure – job “fit.” Human resource processes play the
not-so-strategic role of ensuring that jobs happen (Stedham & Engle, 1999).
In the multinational
strategic context, Mahoney (1989) noted that performance is naturally a primary
dimension of work; however, in some firms the accurate and direct assessment of
performance becomes too difficult or expensive to achieve. In these situations, Mahoney observes
proxies for performance are created by organizational decision-makers. A job can be a proxy for performance. Jobs are paid rates and decision-makers in
the firm assume that if the process of the job is being carried out the outcome
of performance will inevitably follow.
However, Mahoney (1989) also
notes that a second proxy exists; namely, a person’s knowledge and
maturity. We term this proxy as the
"competencies" that reside within a manager. In this view, an individual’s
qualifications, certifications and “maturity” in an occupation are the basis
for pay. People are paid based upon their
qualifications and competencies.
Decision-makers in the firm assume that if people who possess needed
competencies are hired then performance will follow. Another way of visualizing this unit of analysis is to view
competencies as inputs, job characteristics as contextual process, and performance
qualities as outputs. In this case, the
“job/person dichotomy” is viewed as placing (inputting) persons into job
contexts (processes) and expecting stable performance outputs to result from
this combination (Perlman, 1980).
Most IHR processes
traditionally operate at the job level of analysis, and yet this job focus is
really a historical compromise between person and performance. Many IHR issues may be more effectively
assessed at higher levels of analysis (occupation or job family) or lower (position
or person) levels of analysis (Perlman, 1980; Wallace, 1983). Thus there is no reason to assert the
universalistic superiority of job based models--especially in transnational
strategic contexts.
As long as the context is
stable and relatively uniform, then
"job" is an acceptable proxy for performance. When contexts become unstable (as they do in
global business), and must increasingly be made more variable and customized to
local conditions in order to achieve performance, then "job" becomes
a less acceptable proxy for performance.
Success at a job (i.e., a connection between job context and performance
outcomes) in one cultural context does not ensure success of the same job
processes operating in a different cultural context.
For example, multinational
companies normally use the criterion of technical competence as the primary
selection criterion for expatriate assignments (Black, et al., 1999). The assumption behind this selection
technique is that if a manager performs well in New York, it stands to reason
that the manager will also perform well in Tokyo. The problem with this reasoning is that it assumes that the job
in Tokyo is embedded in the same social, cultural and work contexts as the job
in New York. This is obviously not the
case; however corporate headquarters usually do not rework the job description
(or work process) to fit the Japanese context.
The expatriate winds up having to make that adjustment incrementally and
informally on his/her own. Thus, the
job process does change in an international assignment, but not formally, and
out of view of corporate headquarters.
Additionally, corporate
headquarters’ staff is entirely unaware that any job process changes have been
made at all, since their focus is on the job performance (output) of the
expatriate’s efforts. When the
expatriate returns to the U.S., the social memory and learning about
culturally-specific job processes leaves with the expatriate and his/her
replacement must undergo the same self-generated job process adjustments as
were made by his/her predecessor.
To avoid this inefficiency,
attention should be focused on the inputs (personal competencies) and the
outputs (performance experiences) of work.
This competency/experience focus is robust enough to deal with the instabilities
and complexities of transnational work environments. This focus is also more aligned with the macro refocus on
processes as opposed to structures as the dominant form of strategic
implementation (Ghoshal & Bartlett, 1997).
Past performance, from both
the worker’s and firm’s perspectives, equates to what we will call,
“experience." The accumulation of
experiences may or may not create enduring and stable personal competencies. As
long as we specify the specific cultural context of these experiences, they
will make better proxies - in the transnational environment at least - for
performance than would job processes. Another challenge in the transnational
workplace is that experience must often be applied in contexts that did not
produce it. Global activities are often
characterized by their complexity as well as by the turbulence of the global
business marketplace. Thus, transnational firms require IHR process cycles
measured in weeks or a few months rather than measured in months or years. IHR
processes must be operated at dramatically reduced cycle times in order to take
advantage of the potential flexibility and responsiveness of the transnational
strategy (Overman, 1999; Schell & Solomon, 1997; Tichy, 1993).
It may be dangerous to
underestimate the practical issues related to replacing job with person as the
focal unit of analysis. At the same
time, the leap from one unit of analysis to another is not insurmountable. According to Sanchez & Levine ". .
. the primary difference between traditional job analysis and competency modeling
lies in the level of analysis" so that " competencies are broader
sets of human attributes than the narrowly defined knowledge, skills and
abilities (KSAs) of the past" (1999:57).
These authors go one to state that the broader unit of analysis captured
by competencies may be particularly promising in task situations characterized
by "continuous flux", when "group-related tasks" are
critical, or when "missions", "core business values" and
"organizational factors" such as location call for flexibility and
change. (Sanchez & Levine, 1999, p.57)
The Selection of Competency Dimensions
Which competencies will more
accurately capture the nature of global work contingencies and forward the
implementation of a transnational strategy?
Bartlett & Ghoshal (1993) present the idea of a “mind matrix,” the
internalization of control by cadres of socialized managers, to replace the
rigidity and expense of external structural control. This mind matrix control, a form of “social” as opposed to
“bureaucratic” control, appears well suited to more nimbly carry out the
locally responsive, yet globally directed transnational strategy (Adler &
Ghadar, 1992; Engle & Stedham, 1998; Ouchi, 1981).
Looking to Structure and Strategy for Dimensions
Our premise is not that
structural solutions are inaccurate in their assessment of critical dimensions
of control, but rather that external structures are too clumsy, slow and/or
expensive to implement the low cost, “mass customization” that a transnational
strategy requires (Adler & Ghadar, 1992; Bartlett & Ghoshal, 1993).
Structurally, three
dimensions are most commonly applied in some one, two or even three part
combinations. These dimensions are
traditionally called "geographic," "functional," and
"product" structures (Egelhoff, 1988). Multinational strategies are most often related to global product
structures, which combine geographic and product line differentiation (Adler
& Ghadar, 1992; Jones, 1998), while more rudimentary international strategies
are associated with stand-alone global division structures. Transnational firms, however, look to
external cultural, functional and product matrix structures, an expensive and
cumbersome proposition, or the promises of the “mind matrix” (Bartlett &
Ghoshal, 1993; Jones, 1998).
A basic contention of the
proponents of the "mind matrix” is the need to balance the three
dimensions so that no single dimension dominates at the expense of the other
two dimensions (Doz & Prahalad, 1986).
In the language of organizational design, structures must articulate, or
"differentiate" along those areas of variation existing within the
firm (Jones, 1998, Chapter 4). The
"structural articulation" provided by organizational design - over variations in functions, products and
cultures - must translated into "competence articulation" provided by
IHR activities - over these same three dimensions - if the mind matrix is to
provide adequate levels of control.
Strategic control is not
diminished by focusing on IHR competencies. Rather it is enhanced by eliminating
the translation device of jobs and more directly and explicitly connecting
corporate -level effectiveness (to provide a balance of global standardization,
local differentiation and diffused innovation) to individual-level competencies
(to develop, assess and reward a balance of functional, cultural and product
based capabilities). This direct
"line of sight" (Lawler, 1990), unencumbered by clumsy and
time-consuming person to job to firm effectiveness translations (Lawler, 2000),
between balanced individual competence and balanced organizational
effectiveness criteria may be the single greatest potential contribution of the
proposed model.
The greater the strategic
range of response (range in functions provided, products produced or geographic
markets served) the greater the need to create differentiated units to respond
to these areas of variation.
Subsequently there is a greater need to create more effective
integrative mechanisms across these units to coordinate and share the results
of these responses (Burns & Stalker, 1961; Ghoshal & Bartlett, 1997;
Evans & Doz, 1993).
Domains
(Breadth) and Ranges (Depth) Within the Three Competency Dimensions
It is the contention of this
paper that firms moving toward a transnational mode of strategic operation must
focus on competencies related to markets (cultures), functions and products
(see Figure 1).
- - - - - - - - - - - - - - - - - -
Insert Figure 1 about here
- - - - -
- - - - - - - - - - - - -
Note in Figure 1 that the
three competency dimensions (Cultural, Functional and Product Competencies) are
represented by three planes. Most
competency based pay systems recognize not only a breadth (domain) of different
behavioral competency indicators but also a depth (range or “level”) of
understanding within each indicator domain (Milkovich & Newman, 1999,
chapter 6; Zinghiem, Ledford & Schuster, 1996). The approach taken here is to map demonstrable interpersonal
capabilities (inputs) rather than emphasize the job-specific contextual space
(process).
Cultural
breadth and depth. To illustrate the breadth and depth issues inherent in transnational
IHR systems, consider the cross-cultural training of expatriates. The breadth (domain) dimension has been
labeled in the literature “cultural toughness” (Mendenhall & Oddou, 1985)
and alternatively “cultural novelty” (Black, Mendenhall & Oddou, 1991).
This refers to the degree to which the host culture differs from the
expatriate’s home culture in terms of numerous cultural indicators, such as
values, assumptions about human life, or norms, for example. Countries can be ranked in terms of their
culture novelty (Torbion, 1982) and the implication of culture novelty for
expatriates is as follows: Degree of need for the acquisition of new
cross-cultural skills rises proportionately with degree of cultural
novelty.
Thus,
an expatriate transferring to Tokyo will need to work much harder at acquiring
the skills necessary to succeed in their overseas assignment than the same
expatriate would if he/she was assigned to a less culturally novel
country. As cultural novelty increases,
so does the amount of time that is necessary for cross-cultural training before
the assignment, and in-country training during the overseas assignment. Similarly, the higher the cultural novelty,
the more rigorous the cross-cultural training needs to be.
Currently, most U.S. based
MNCs offer training programs that are standardized and low in rigor – no matter
what country their people are assigned to.
This does not enhance the potential for expatriate success (Black, et
al., 1999). Cultural depth refers to
the length and task complexity of the expatriate assignment as well as the
requirement to work closely with coworkers from different cultural
backgrounds. Again, the deeper the
assignment the more in-depth and detailed the cross-cultural training needs to
be (Mendenhall, Dunbar & Oddou, 1987).
Functional
breadth and depth. Functional breadth refers to
the traditional arrangement of work design based on common expertise,
experiences, and use of common resources;
for example organizational structure that is creating around the
dimensions of accounting, marketing, finance and production functions. Also, individual domestic and global careers
and training often are focused and/or delimited in the universe of these
functional domains.
Functional depth refers to
the level of specialized expertise available within a particular functionality;
for example, advanced and specialized auditing and forensic accounting
capabilities within the accounting function (Jones, 1998). This dimension relates to the degree to
which an individual is delimited to a specific function in terms of their
competencies, and is unable to span functional boundaries.
Product
breadth and depth. Global product competencies
required vary dramatically. The
classification of the product as an industrial good (generally needing little
or no modification) or a consumer good
(generally needing moderate to extensive modification), the product’s
position in the product life cycle, the number of product lines in the firm’s
product mix, and the number of product items available to the market in the
firm’s product line, must all be understood and taken into account (Templeton
and Treece, 1994). Firms entering new
consumer goods markets with new products or existing products that are new to
the market have found it strategically favorable to intentionally shorten the
product’s life cycle. By making
periodic product adaptations to the newly introduced products before
competitors can bring out a product to effectively compete against the original
offering, the firm is able to capture and maintain a larger market share (Rugman and Hodgetts, 1995).
Global firms must, as a
matter of strategy, have a number of product items in their product line to fit
local and regional preferences.
Understanding these items and lines and the underlying personal
preferences they meet requires greater product competency depth. The manager will be expected to make product
offering (product features, branding, packaging, warranty, etc.), channel and
logistical, promotional (advertising, personal selling, sales promotion) and
pricing decisions for each product item in their product line marketed within
their market (country or region).
Furthermore, they must
continue making product modifications that will insure a competitive
advantage. As the organization moves
from being multinational to transnational, product competency requirements will
continue to increase in both breadth and depth. The global product will be guided by the same strategic
principles, use the same name (global brand), maintain a similar image and
positioning, but with a marketing mix (product, price, promotion, and place)
that may vary from country to country (Keegan, 1999). Here the manager not only needs skill and knowledge breadth but
also skill and knowledge depth in order to maintain the continuity needed by a
global product as it moves into various global markets.
Combining the Three Competency Dimensions into a "Global
Competency Cube"
Combining the three
dimensions along the domains and ranges of the various breadths and depths
results in a three-dimensional “Global Competency Cube” (see Figure 2). This cube graphically represents a three
dimensional space that captures the “location” – analogous to longitude,
latitude and altitude – of all salient global competencies. The cube comprises an IHR measurement schema. This schema can be used to map, individually
and in the aggregate, the mind matrix (Bartlett & Ghoshal, 1993; Ghoshal
& Bartlett, 1997).
- - - - - - - - - - -
- - - - - - - -
Insert Figure 2 about here
- - - - - - - - - - - - - - - - - - -
An enhanced ability by
managerial groups to explicitly focus on identifying and, perhaps more
importantly, balancing strategically linked competencies, is an absolute
necessity in the transnational mode of operation. The mind matrix culture of the transnational organization
requires a high degree of socialized agreement and coordination among the cadre
of global managers (Bartlett & Ghoshal, 1993). This model is intended to provide a cultural frame, common vocabulary
and referencing blueprint in order to mobilize and coordinate the global cadre.
The exact nature of the
competencies required along cultural, functional, and product dimensions will
vary from firm to firm according to strategic intent. The firm-specific “coordinates” within the domains and ranges
associated with the three dimensions can be programmed or specified during
strategic decision sessions. These
coordinates have the potential to be utilized in a number IHR processes, and
possible implications will be discussed in the conclusion section of this
paper. Before this discussion, however,
it is important to distinguish further between the construct of
"competencies' and the actual acquisition process involved in building the
competencies necessary for the successful implementation of transnational
strategies.
Acquiring Transnational Competencies
"Process
competence" relates to how individuals acquire or update new content or
outcome knowledge that is important for success in the transnational context. Process competence is that quality of mind,
those "traits and characteristics" (Dowling et al., 1999, p. 86),
which facilitate speedy adaptation to new environments. Process competence can be conceptualized as
the ability to reduce learning cycle time at the individual level. The exact nature of process competence is
not currently comprehensively known; however, scholars are beginning to study
this important aspect of IHR management.
Some
authors conceptualize process competence in terms of cultural flexibility,
willingness to communicate, ability to develop social relationships, perceptual
abilities, conflict resolution style and leadership style (Black et al.,
1999). Referring to IHR system
competencies, but equally applicable to the transnational capabilities of
individual employees, Claus (1999) refers to business savvy, cross cultural
awareness, communication skills, leadership skills, frame of reference and
personal attributes. Kets de Vries and
Mead refer to cultural adaptability (1993).
Phatak (1992) presents abilities related to cultural empathy,
adaptability, diplomacy, language ability, positive attitude, emotional
stability and maturity. Murray &
Murray speak in terms of effectiveness and coping skills (1986). Finally, Schell & Solomon (1997) present
a list comprised of expectations, open mindedness, respect of other beliefs,
trust in people, tolerance, internal locus of control, flexibility, patience,
social adaptability, initiative, risk taking, a sense of humor, interpersonal
interest and spouse communication (for a more complete review of the notion as
applied to global leadership development, see Mendenhall, in press).
These
various traits and characteristics facilitate the speed and efficiency with
which managers encounter, assess, and ultimately cope with new
environments. A competence in the
process of adapting to new environments results in the more permanent and
enduring outcome competencies in the areas of cultural, functional and product
knowledge. Exactly how these traits
produce process competence, and the actual dynamics of process competence, have
yet to be cogently theorized. Until
this occurs, conclusive applications for IHR training and development cannot be
drawn.
However,
by differentiating between process competence and outcome competencies it is
possible to distinguish between the means to quickly and efficiently
achieve a goal - a transitory process - and more enduring ends. In the case of a manager in a transnational
company, the end is a balanced, integrated and in depth understanding of the
cultures, functions and product lines required in order to implement the
transnational strategy. Thus, though
the goal becomes clearer from our model in terms of IHR policy focus, the
"hows" of achieving IHR policy ends remain elusive.
Potential Human Resource Applications of the Global Cube
This framework, which
contends for the utility of balanced cultural, functional, and product
competencies has the potential to be applied to all major IHR processes. On the
macro or strategic level, the assessment and planning for firm, SBU, divisional
or regional activities may be analyzed by inventorying and aggregating existing
competencies and experiences. Also on
the macro level, decisions related to joint ventures and merger and
acquisitions may be assessed using this framework (Harrigan, 1984; Lorange
& Probst, 1987). Finally, this model can provide a framework to assist
strategic decisions related to movement into or out
of selected markets, product lines and functions.
Recall the earlier
discussion of the primacy of personal competencies as a control device over
job-based structural control in the transnational firm. On the micro level, unit managers can assess
existing competency mixes within the firm and recruit and select individuals or
teams for assignments. These
individuals and teams would be determined to have the combination of cultural,
functional and product line experiences that match the requirements of the
assignment. Advanced databases can
facilitate the assembly and access of worker assignments, performance
management assessments, and any number of competency indicators and most
closely match those combinations with the competency requirements of the
assignment at hand (Peppard. 1999).
Training and development
needs may also be more completely assessed using this model. The supervisors of employees that have
adequate competencies along functional or product dimensions may be unaware of
the cultural gaps in experiences and those competencies related to doing
business with a certain culture.
Individual “imbalances” in the three competencies may be more quickly
uncovered, communicated and redressed by training or assignments that build
competencies in deficient areas (Tichy, 1993).
Supervisors will not have to naively estimate the level of candidate
capabilities for global assignments – a practice with potentially devastating
results for employees and firms alike (Black, et al., 1999).
The “Global Cube” provides
both a framework and template to assist the operating level “entrepreneurs,”
senior management “developers,” and top level “leaders” in developing and
maintaining those new and radically different management roles required by the
“individualized” transnational firm (Ghoshal & Bartlett, 1997, pp. 218-241).
Managerial development may be enhanced by allowing senior management
“developers” to more thoroughly and accurately track the cultural, functional
and product acumen of operating level “entrepreneurs”. The developers would then be able to provide
the line entrepreneurs with more timely assignments, mentoring interventions
and orchestrate those task experiences required to build a global sensibility
and develop senior level replacements for the future (Ghoshal & Bartlett,
1997).
Top level “leaders” may look
to this global framework to identify and challenge unbalanced, unidimensional
biases while at the same time visualizing new cultural, functional and product
goals. By publicly referencing and
applying the values embedded in the framework, the visionary leaders can “build
a context of cooperation and trust” and grow the “mind matrix” of social
control (Ghoshal & Bartlett, 1997, p. 222).
The conceptual framework of
the Global Competency Cube is not an automatic pilot that mechanically assesses
and determines IHR processes. Rather it
should be considered as the shared “artifact” of a transnational culture
(Schein, 1985). As such, its role is to
evoke and remind members of those shared values and assumptions – related to
balancing competencies, striving to achieve “overarching purposes” and tapping
more completely the human potential – so essential in order to efficiently
combine local responsiveness with a global perspective (Ghoshal & Bartlett,
p. 222).
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