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Your Global Leadership Strategy, Part 1: Two Major Balances to Get Right

By Elmar Kronz

Elmar KronzWe’ve heard of successful multinational companies (MNCs) failing in their quest to expand globally. Prominent examples include such revered companies as Walmart or eBay. While these two companies are still very successful MNCs by many accounts, they experienced significant setbacks, and in some cases, painful and costly failures in key expansion markets.

Walmart’s foray into Germany ended in 2006 after eight years of burning through US$1 billion. Walmart's domestic success is built on streamlined distribution channels, high-volumes sales and low prices—none of which fit into German culture or its regulatory environment. The demise of eBay in China was a result of not understanding the market and culture, and underestimating the local competition Taobao. Customers wanted to be able to see a seller’s online status and communicate with them easily via chat—a function that was not seamlessly incorporated into eBay’s China system.

While there are countless examples of similar expansion failures, fortunately there are examples of very successful globalization efforts as well. What lessons can we learn from the many failures and successes in global expansion, which would equally apply to the “globalization” of leadership talent and talent management? Unfortunately, the discussion about best practices in global talent management has been largely dominated by anecdotal “evidence” and opinions, yet very little evidence.

Combining DDI’s practical experience with MNCs and evidence-based findings from global research, I want to summarize major pitfalls and successful strategies to support globalization with successful talent approaches. While black-and-white recommendations might be appealing and comforting, globalization strategies for any business and the required talent initiatives are way too complex and ambiguous to approach with overly simplistic heuristics. Instead, there are two major balances that multinational organizations need to get right in their global talent strategy: balancing between Global and Local, and between Design and Implementation.

This balancing act is no different from decisions related to management of a complex global matrix structure in large MNCs. While local operations are ultimately accountable for their local P&L and market success, major global business divisions often significantly influence the local R&D, product- or HR strategy in order to create the most successful blend between global expertise and efficiencies and local customer and market knowledge.

Balance #1: Global vs. Local

The first and fundamental balance to strike, not just for global talent initiatives but also for organizational strategy and culture, is the extent to which organizations control or centralize decisions from their headquarters. Both extremes—near total centralization of decision making as well as 100 percent localization—mostly fail. Too much control and a “headquarters knows best” mindset often prevents organizations from identifying unique market challenges, costs, legal or technology requirements and consumer preferences, just as eBay failed to do in China or Walmart in Germany.

For talent management initiatives, companies need to make deliberate decisions about which talent decisions should be more and less centralized. In our global research study Meeting Tomorrow’s Leadership Challenges in Multinational Companies, we asked HR leaders which talent systems are more successful when mainly centrally or locally controlled.

Finding the Right Balance of Corporate vs. Local Control of Talent Management Programs

IM Balanced
IM Corporate controlled
local control

Get more insights on Global Program Implementations.

While several talent systems benefit more from a predominately central or corporate controlled approach, others are more successful when there is an appropriate balance between corporate and local input and flexibility. However, none of the talent systems we asked HR leaders about were seen as most successful when mainly locally controlled. Fully-localized strategies run the risk of not leveraging economies of scale of global organizations and create a disconnected and inconsistent leadership culture.

For instance, if performance management systems are different in every location of a global organization, it creates huge inefficiencies and robs the organization of the ability to measure, manage and discuss performance with a common understanding. For multinationals, this can present huge disadvantages, especially when moving talent across countries and markets. How can an employee’s performance or potential measured with one set of standards be compared to someone measured on a completely different set?

For leadership development at the frontline and mid-level, which according to our research should leverage a more balanced approach, inconsistency has the biggest damaging impact on program success, followed by inadequate skills of the global HR team. The counterpart to the biggest barrier—too much control—makes the third spot in the ranking of most damaging barriers to leadership development success, but well behind the issue of inconsistency.

MMC Barriers

Learn more about Barriers to MNC Program Success.

When tasked with the design and implementation of global talent initiatives, it’s best to base decisions on data and research, combined with consideration of the organization’s strategy, culture, and diversity of markets. This might require adjustments along the way in order to get the global-local balance right but good governance guidelines and decision-making processes will optimize your chances of getting it right—instead of leaving it up to chance.

Balance #2: Design vs. Implementation

Many of us have been involved in the design of global talent initiatives, from leadership development programs for leaders in different markets to the identification and acceleration of high potentials in the organization. And if you are like most people we know in the HR profession, we all get a lot more satisfaction from the ideation and the creative process of designing intricate development events or learning journeys than from the tedious planning of the implementation process. But here lies one of the biggest barriers to success of talent initiatives, especially global ones.

Ultimately, the goal is to achieve talent and business outcomes, which create a significant and positive return on investment, such as superior competitiveness in the marketplace. Many global talent initiatives represent considerable investments to the tune of several millions of dollars, not even considering the opportunity costs for the internal resources needed to design and manage them. Plus, if many of these initiatives are not sustainably producing better associates and leaders, the return on investment equation will become a negative one.

Research conducted by the Corporate Leadership Council show that two thirds of the effectiveness of HR programs is due to implementation—and this is a general finding, irrespective of whether it is global or local. A McKinsey survey of 2,200 global executives highlights the benefits and secrets of successfully implementing change with impact. According to the McKinsey report, good implementers (or companies that have adopted sound implementation practices) were able to realize a significantly positive impact on factors such as financial outcomes or sustainment of change efforts.

Unfortunately, our experience suggests that many organizations underestimate the importance of thorough implementation. While this represents a big problem for domestic companies, the negative impact of lackluster implementation on global organizations is multiplied. Plainly speaking and in light of the available evidence, it is fiscally irresponsible for global “implementers” of talent initiatives to not put at least as much effort and investment into the planning and execution of good talent implementations as they do on the design itself.

What next?

Once the two major balances are addressed, there are six important factors to consider and plan for when designing and implementing global talent initiatives. Stay tuned for Part 2 of this blog series.

Elmar Kronz is vice president for DDI’s Global Business Development and works directly with clients to define and execute global leadership strategies. Follow him on Twitter at @ElmarKronz_DDI or email Elmar.Kronz@ddiworld.com and share how you’re keeping the balance right.

Get more research and actionable insights on multinational organizations from the Global Leadership Forecast or the on-demand webinar From Shanghai to Chicago: Making Leadership Development Work Anywhere.

Posted: 29 Nov, 2016,
Talk to an Expert: Your Global Leadership Strategy, Part 1: Two Major Balances to Get Right
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