Category Archives: Leadership Development

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Why Culture is Important in International Business

Posted on June 8, 2009 by | 12 comments

Denise HummelGuest Author:
Denise L. Hummel – Universal Consensus

Editor’s Note:  We are especially pleased to welcome our first Guest Author, Denise Hummel, who contributed the piece that follows on the importance of culture in international business

Doing business on a global basis requires a good understanding of different cultures.  What works in your country might not work well in another, and could even be interpreted as an insult!  And in your role as an international human resources professional, it’s important to raise the awareness of cultural issues within your organization to ensure effectiveness.

Consider the following basic questions:

When George Bush gave Chinese Premier Li Peng a gift of cowboy boots embroidered with the American and Chinese flags, was it an appropriate gift?

  1. Yes, a thoughtful sentiment and a keepsake appropriate to the occasion
  2. No, a significant miss on the part of administration protocol experts
  3. Yes, a good choice, if only he had known the Premier’s correct shoe size

Answer: 2. 

Unfortunately, in China, the soles of the feet are considered to be the lowliest part of the body and gifts of footwear, no less embossed with the nations’ respective flag, was a significant miss on the part of administration protocol experts.

When formalizing a deal in the Middle East, it is imperative to

  1. Determine that the contract is iron clad with strict attention to jurisdictional issues of international law to secure a just outcome should there be conflict
  2. Solidify the interpersonal trust relationship as this rapport is critical both during the deal and if conflict develops
  3. Retain legal counsel in the country in which the business undertakings will primarily take place and ensure that this attorney has a golfing relationship with most members of the judiciary.

Answer: 2.

When doing business in the Middle East, the surest indicator of a successful business relationship has very little to do with the content of the contract or the extent to which the language will hold up in court.  Court systems in many of these countries move slowly with inconsistent results, and your business counterparts in many Middle Eastern countries do not put their faith in the legal system to determine the outcome of a conflict.  Absolutely essential to the success of the deal is the interpersonal rapport and relationship established during the negotiation stage and at every point thereafter.  Failure to understand and cultivate this aspect of the deal increases the risk of failure to a critical degree.

In sending an email to a Japanese colleague with whom may wish to collaborate on a potential business deal, you would be most successful if you

  1. Begin the email by addressing the individual warmly and openly, by his first name, immediately closing the cultural gap
  2. Always use Mr. , Miss or Mrs. followed by the last name of the individual, followed by an embracing and forthright interaction
  3. Use the last name, followed by the term “sama” to address your email, followed by clear text set forth with the utmost formality.

Answer: 3.

The risk of email is that it lacks certain social contextual cues such as body language, eye contact and intonation and can therefore create misunderstandings.  There is also no way to see the demeanor or reaction of your counterpart and adjust your communication strategy to compensate for a misunderstanding once it is created.   When in doubt, it is always safer to err on the side of greater formality and deference.  The Japanese have become accustomed to making allowances for informal communication from other countries, but you will proceed with more credibility if you make a sincere effort to adapt to their customs.  The use of the term “san” and, for those in a position of high authority, “sama” is honorific.  Use the last name, followed by the honorific term, followed by extreme clarity and formality in the text, with as few assumptions for context as possible.

Summary

The cultural nuances that affect international business obviously go far beyond the ability to greet your international colleague or choose the correct gift.  Issues related to the culture’s time orientation, whether it is an individualist or collectivist society, space orientation, and power distance, not to mention conflict assumptions and non-verbal communication all affect understanding your colleague across the table, as well as your chances of being understood. 

Preparation by a trained expert related to these issues not only assures that unnecessary blunders will be avoided, it brings to each of us a personal knowledge that deepens our understanding of others, thereby promoting acceptance, understanding, and on the level of international relations, peace and prosperity.

More About Denise:

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Posted in Cross Cultural Insights, Expatriates, General, Leadership Development, Training

Dealing with Compensation 101

Posted on May 31, 2009 by | 2 comments

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Author:

Chuck Csizmar – CMC Compensation Group

I once supervised a Compensation Analyst who had spent a great deal of time attending professional seminars and workshops.  She had attended these instructional sessions to learn about Compensation, as part of her professional development.

One result of that education was a favored response when faced with a challenge at work; she would fall back on her class work experience by saying, “the greatest minds in Compensation say that . . . “.  It took a great deal of patience on my part to educate this part time practitioner / part time student in the difference between the classroom / textbook answer and the reality of the workplace.

A short while ago I came across an HR blog in which the author was instructing readers in how to create a merit performance matrix.  Very good stuff, I thought, admiring the technical step-by-step instructions, except I knew from long experience that the procedure being described would never work in the real world.  Didn’t the author realize that?

Yes, it is very important to understand the technical foundations of Compensation methodology and practice, but first and foremost you need to anchor yourself in the real world, to know what will work and not work in your own organization – no matter what the finest minds in Compensation think.

Why doesn’t Compensation theory always match compensation reality in the workplace?

  • Business realities:  management will typically know more about a particular business situation than you do.  What you are able to provide to the decision-making process as a Compensation professional is limited to your particular subject area, while management usually has the bigger picture – the perspective of multiple viewpoints. Your compensation advice may not fit their business reality, no matter how logical an argument you make.
  • Bias of decision-makers: decision-makers may feel that they intuitively *know* the right approach to take (they’ve done it before, if-it’s-not-broke- don’t-fit-it mentality, a friend / relation / old college chum suggested an approach, etc.).  Perhaps they read an article just the other day and now are insistent to follow the advice of an author who doesn’t have a clue about their particular business.  Years ago I worked for a company whose CEO forced HR to implement a particular benefit plan because he had read a magazine article.  It does happen.
  • Problem avoidance: short of killing the messenger, one solution for management is to do nothing about a problem (you’ve exaggerated it, the solution costs too much, there’s still time, etc.).  Senior managers can be like politicians in avoiding the *big* decision unless it bites them in the leg.  It can sometimes be dangerous to your career if you try to force a decision.
  • Business culture or model: some initiatives just don’t “fit” in your organization.  Managers with a laid back organization style will not be interested in demands to document everything, standardize policies and procedures and have approved forms for every possible use.  Picture your head banging against the wall.

Aside from management giving you a dose of reality across the cheek , sometimes those subject matter experts who instruct in Compensation techniques fail to ground their instructions with a caution to their students: check this process out in the reality of your workplace *before* you take a laboratory technique and wave it in the face of your management.

Two examples:

1)      Merit matrix:  when designing a pay-for-performance merit increase matrix the standard rule is to place the average increase percentage in the cell block most populated by employees (average performance and average position-in-range).   The sound reasoning for this technique is to better manage the costs associated with that year’s annual increase process.

A lot of years ago I followed that approach in my first compensation leadership role.  I still have a little bump where my head hit the wall.

Here’s the rub; such a technique requires that the matrix change every year, as the analysis demands you study where the population averages are for each year.  But management will likely have none of that. They want the same matrix every year, for ease of administration and communication.

2)      Cost of living as a basis for pay increases: I once watched over a fascinating exchange on a Compensation bulletin board where the debate raged on for days over the appropriate formulae to use for calculating the cost of living vs. cost or labor as it affected the average pay increase that management would approve.  Each side would provide formulae, charts and graphs and quotes from notable experts to press home their opinion.

The reality for this exchange is that management does not use the cost of living as a prime determinant in their decision-making.  They are more likely to roll their eyes at the technical debate and ask only about competitiveness and bottom line cost – and why can’t we do the same as we did last year?  If their decision relates to the cost of living in some way, that’s only a nice coincidence that they can use in their communications.

An area that separates the compensation technician from the compensation professional is the ability to deal with what I call the “softer” side of compensation.  Survey statistics, charts and formulae are very good to a point, but management will want to know what it means and what to do about it.  So the answer isn’t simply reporting the data, but in taking that next step to help management understand and strategize their next move.

The contribution you can make to your organization is blending the technical knowledge (the how-to) with seasoning and experience to understand what will work for your organization, considering culture and management bias.  Technical knowledge will give you the same answer every time, but knowing how to use that knowledge like a craftsman’s tool to aid in achieving business objectives – that is the key to success as a Compensation professional.

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Posted in Compensation, Leadership Development, Training

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Does Your Company Really Pay For Performance?

Posted on May 18, 2009 by | 2 comments

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Author:
Chuck Csizmar – CMC Compensation Group

To answer this question most companies would say that, yes – they have a pay-for-performance (PFP) program.  Such a statement is chic, politically correct and offers a wonderful message about how the company values its employees.  What’s to argue with?  Paying employees on the basis of what they have contributed to the company makes sense, right?  If they give more they receive more, right?

On the other hand, to answer that question in the negative is to suggest that you are not fair to your employees, that your idea of proper reward is to bypass individual performance in favor of treating everyone the same, regardless of contribution.  However, as that acknowledgement would paint you as an insensitive employer, it’s likely you’ll fall in line and say “YES, of course we pay our employees for their performance.”

But do they?  Do you?

There is a tendency by many in management to believe that the granting of variable pay increases automatically means that their company provides pay for performance.  However, if as is usually the case practically everyone receives some form of pay increase, is there really a distinction being made between high performers and those who merely occupied a chair for the past 12 months?  Isn’t such a practice (if we haven’t fired you, then you’ll get an increase) more like a modified attendance award?

The decision to adopt pay for performance strategy should include two critical elements:

  • The decision not to pay if the employee hasn’t performed
  • The decision to make it worthwhile for an employee to be a high performer

One of the common pay practices that continue to hamper the effectiveness of PFP plans for base salary increases is the misuse of the annual merit pay pool through inflated performance evaluations and automatic increases.  This practice will increase your costs, and in a manner that will not effectively reward employee performance.

Making PFP work for your company will require hard decisions from line managers who are otherwise accustomed to maintaining employee morale through the avoidance of objective performance reviews.  We have seen that, while there is a shift to rewarding individual effort, more monies are not being provided as a result of that shift.  So in order to more effectively use available salary increase dollars companies need to reward their high performers with money effectively taken away from (not granted to) those performing at lower levels.

This may also mean that average performers, the bulwark of so many companies, will receive less than they might otherwise expect (which is at least an average raise).  What it comes down to is a company’s ability to afford proper rewards for higher achieving employees (motivating and retaining them in the process) by reducing or eliminating rewards to those deemed as underperforming.

The risk exposure is that if managers, through the utilization of performance management programs, do not properly identify and restrict awards for non-deserving employees, the PFP budget will not have enough funds to afford appropriate rewards for high performers.  So you should ask yourself, who is it you would rather disappoint?  Who has less impact on your business and whose loss will be less disruptive to your operations?

While published reports clearly indicate a trend away from one-size-fits-all reward systems, one should look below the surface to learn whether employee performance is being appropriately measured and rewarded.

To effectively use a pay-for-performance system a company should:

  • Educate employees as to what performance will be rewarded.  This requires measurements, and that performance objectives align vertically in the organization (employee goals relate to supervision, whose own goals relate to management, and on upward to corporate goals);
  • Provide a well-defined rating scale that helps managers distinguish between levels of performance
  • Provide a clear distinction of reward between those who have delivered and those who have not.  An employee who does not see a relative gain from working hard all year is a lot less likely to repeat their performance the following year.

So the next time you are asked whether your company rewards employees for their performance, perhaps your answer might not differ, but now you recognize the distinction being made by your employees.   It is up to you whether to be satisfied with your answer.

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Talent in Ghana

Posted on May 12, 2009 by | 4 comments

Imported Photos 00033 Author:
Yendor Felgate –  Emergence Consulting

The traditional wisdom on Africa is that there is a one way passage for talent to more ‘developed markets’. Experience suggests that a continuous ‘brain drain’ is occurring, where talented professionals are being ‘denuded’ from home markets, exacerbating an already tenuous scarce skill situation.

Change is Coming

Recently I hosted a talent management workshop in Ghana, where I am starting to see signs that things may be changing.  This is not say that the ‘war for scarce skills’ does not exist or that the predominant trend has changed, but rather we are seeing a more complex picture emerging.

The change may have started even before the impetus of the global financial services meltdown, if anecdotal evidence from headhunters and resourcing specialists working in Africa are accurate.  Ghana may be a useful case in point to begin to understand the emerging changes in talent behaviour and the resultant complexities for business in Africa.

Recent Trends

Ghana is a democratic West African country that has been independent for over 50 years.  Traditionally the country has been economically reliant on commodities and natural resources, though is diversifying rapidly into financial services and telecoms.  Recent trends suggest an increasing level of foreign direct investment and interest from the region in the opportunities offerred by Ghana.

In the past, global education and career opportunities were valued over local organisations and career paths.  The first change to this dynamic was the rapid expansion of Nigerian banks and the telecom revolution in Ghana. Both sectors are large consumers of talent and ‘overheated’ the local and expatriate skill markets, largely by paying aggressively.

The second major trend is the exciting opportunities for entrepreneurs.  This has attracted interested from first and second generation Ghanians based outside the country.  Initially, this took the form of direct investment, but is increasingly involving Ghanians leaving corporate roles outside Ghana, to take up local opportunties.

The final trend is the global instability in ‘developed’ job markets, where many Ghanians are now looking to return to corporate and professional roles within the country.  The perceived ‘gap’ between global and local has diminshed significantly.

The net result is that many corporates in Ghana are able to compete for talent more effectively than before. I think this is the real change – global players may now not be the automatic default choice for African talent. African business has a window of opportunity they can exploit. However, the complexity lies in the detail.

The challenge is that good people have many opportunities both locally and regionally they can explore in corporates and on the entrepreneurial front. My sense is that this has less to do with money, but the personal connection people make to these opportunities.  In my language, an holistic employee value proposition is more important the ever.

What About Pay Levels?

Ghana Pay Ranges

Total Compensation in Ghana

Pay levels amongst leading employers in Ghana are competitive, but relatively low when compared to more developed countries, and also to many countries in Africa.  As you can see from the illustration, total annual compensation in Cedi ranges from about 5,000 to 20,000 Cedi for support staff positions, while pay for professionals varies from approximately 24,000 to 80,000 Cedi.

Source:
Birches Group LLC Survey of Leading Employers – September, 2008

In Summary

The difficulty most Ghanian businesses face is that they are not used to working with the intangible concept of the employee value proposition and tend to want to compete on remuneration, whilst keeping relatively conservative management practices.  This is changing, but I hope it is sufficiently rapid to fully utilise what may be a very narrow period of talent parity.

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Posted in Compensation, General, Leadership Development, Training

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Why Managers Don’t Manage Pay

Posted on April 27, 2009 by | 1 comment

bio_400x4003Author:

Chuck Csizmar – CMC Compensation Group

When an employee is promoted to their first manager’s position, they are given the proverbial Keys to the Kingdom – your company.They now have the authority to spend your company’s money.From hiring, to promotions, to salary reviews and equity adjustments they are now able to make the decisions that directly impact (increase) your labor costs.

However, most of these managers turn out to be, at best, well intentioned amateurs at the process of making pay decisions that are appropriate for the needs of the business.Fresh from being anointed they often lack the basic internal education necessary to make business vs. emotional decisions – and their actions commit you and the company to costs that may not be in your company’s best interests.

Actions taken by these managers not only increase direct costs, but often irritate other staff members as the circumstances become known, creating morale and internal equity problems at the same time.The net result is usually a corresponding lack of engagement and ultimately separations by disenchanted employees.

Note:  Most employees leave managers, not companies.Thus actions do have consequences.Likely this is not what you envisioned when you made that promotional decision.

Now, how did (fill in the name of your company here) get themselves into this mess?

First of all, no one *really* trains managers on how to properly attract and reward employees via base salaries and incentive pay.

A few anecdotal examples:

  • Just because some bloke is a good “XYZ Operator” does not mean they will be an equally good “XYZ Manager”.The skill sets for success are dramatically different.
  • How many managers understand your company’s philosophy about pay?Do you?How many understand the workings (the what and the why) of the company’s pay practices and methodology?These are the folks responsible for spending 40% to 60% of your revenue in the form of employee pay, and even the most well-intentioned is prone to make mistakes.
  • Managers want to be liked; they do not wish to pick favorites, do not want to discriminate on the basis of performance and definitely do not want to have their decisions challenged.They would rather point a finger at HR and assign the blame to them for having to assess performance and distinguish one employee from the other.Left to their own devices they would give everyone as much as they can.

If you were a high performing employee, would you like to work for this sort of Manager?If you were coasting at work, barely putting your time in, would you want to work for this sort of Manager?Which sort of employee do you think will eventually tire of being undervalued, and quit? Leaving the Manager with a staff of . . . .You get the picture.

Ineffective managers are always afraid that an unhappy employee will decide to quit, but that is usually a selfish thought.Their prime concern is more often what your departure would mean to their deliverables, to their reputation as a manager.Your departure is typically viewed as an inconvenience to them, not an avoidable loss for the company.A reflection of this is when managers resist a transfer that is clearly in the employee’s career interests.The manager’s concern is how that transfer affects their department – and whether their personal success becomes that much more difficult to attain.

Ineffective Managers can be a defensive lot, challenging attempts at reform.Why?Because of their fear that spotlighting reform action will demonstrate their ineffectiveness (make them look bad), and that is unacceptable.Typically their advantage within the company is that the more ineffective the manager, the stronger their political connections. And as senior management oftentimes surround themselves with those most agreeable to their own way of thinking, it’s not surprising.

Assuming the company’s willingness to make key decisions and the presence of the all-important support from senior management, companies can correct the problems that they’ve created.They can:

  •  Select candidates for management positions on the basis of their skills / potential for actual management (dealing with people, managing projects, business-oriented, professional demeanor, etc.
  • Educate Managers in the philosophy and methodology of the company’s pay programs, ensuring that this information is shared with their staff
  • Construct job specifications that call for a Manager to manage, as a prime accountability, limiting or even eliminating the retention of individual contributor responsibilities
  • Measure and reward the performance of the Managersprimarily on the basis of how they have actually managed their employees, or on the performance of their unit
  • Encourage Managers to develop the potential of their employees, to the point that a staff member being promoted / transferred upward is a mark of success for the Manager
  • Ensure that procedural checks and balances are in place to ensure that pay decisions are reviewed by at least one higher level
  • Hold Managers to an annual salary budget; let them develop the budget and monitor / adhere to it during the year

Consider the above as a checklist that can be used to test your company’s vulnerability to wasted money, employee morale problems / turnover and avoidable cost increases.

Would you be comfortable with how your own company would score?

My advice to clients is to face these issues straight on, to implement policies & procedures that save money without penalizing high performers or mistreating their employee base.But the challenge will always remain, as there is an inherent reluctance on the part of many managers to make the tough decisions, because we do want to be liked, we do like to give good news, and we do not like to play judge and jury with an employee’s career.

But that behavior is not managing is it?

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