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Brexit: hard or soft? The uncertain future relationship with the European Union that Britain is officially leaving in 2019 is prompting numerous companies to set up new bases abroad, with plans to relocate staff to alternative locations across the continent, including to Amsterdam, Dublin, Frankfurt, Luxembourg, Paris and Vienna. Banking, financial services, airlines and telecoms have been making the most plans, estimating that anywhere from a few hundred to thousands of jobs could be moved elsewhere, starting with senior management teams.

A large-scale relocation of talent would mark a shift from the traditional pattern of periodically expatriating individual employees for temporary assignments in subsidiaries abroad. Chris Debner, a strategic global mobility adviser, has noted in a recent Santa Fe Relocation Services report that, "Over the next decade, the concept of one-way permanent transfers of employees, rather than ... three- to five-year secondments, is likely to become more popular. The trend that companies are likely to relocate groups in the wake of the Brexit ... require(s) extensive change management that needs strategic planning and consideration of the associated risks and challenges."

One of the big challenges is that, even though international assignments have become much more formalized and structured over the past two decades, multinationals continue to have an ethnocentric mindset about them, with headquarters still wanting to call all the shots. And while training helps, there is little indication that what's been done so far has been effective at raising managers' cultural proficiency for leading in a global context. According to one study, participants were likely to come away from cultural awareness training with more cultural stereotypes, which raises questions about how cultural knowledge is being conveyed.

Although Brexit pushes such questions to the fore, the issue of accessing and managing talent to feed growing mobility needs is by no means limited to British companies but affects many businesses across various sectors and geographies. Industry surveys suggest that cross-border work is increasing -- despite anti-globalization rhetoric to the contrary -- and multinationals are struggling not only to prepare their employees for global leadership responsibilities but to fill the number of international assignments available.

This article is based on my research on global work, talent retention and cross-cultural management. I start by looking at the changing context in which executives operate today before discussing the implications of these changes for global leadership. Then, I make a series of practical recommendations for nurturing global leadership competencies.

Brexit is only the latest excuse for mobility and talent management to be at the top of the CEO agenda. For companies with limited experience in this area, the risks are multiplied. However, there are also great opportunities. This article shows you how to make the most of them.

The Changing Global Context
Long before Brexit, executives noted the complex nature of the challenges they faced in fulfilling their global leadership responsibilities. Complexity, more than any other variable, was cited by executives in a 2010 IBM study of 1,500 CEOs representing 33 industries across 60 countries.

This complexity is reflected in the changing nature of multinationals themselves. Multinationals used to focus on managing the relationship between headquarters and subsidiaries. But global competitive pressures have led to a much more networked model. As such, national subsidiaries have started to have more direct interactions with each other. They have also been disaggregated into discrete function-specific, value-adding units like sales or R&D. This integrated network approach -- combined with a bigger global footprint, diverse customer segments and wider geographic dispersion -- has further complicated the tasks of global leaders.

For example, it raises coordination challenges. To deal with this, multinationals have introduced sophisticated organizational structures and reporting lines for regulating everything from routine interactions to cross-border projects and special task forces. However, the utility of all these matrices remains ambiguous.

Consequently, the very nature of how global work and career paths are structured has also become more complex. First, the integrated network model implies that cross-border interactions are not limited to the C-suite but involve middle management and even frontline staff , such as R&D scientists or sales employees when coordinating new product development or sales strategies across regions. This pushes the responsibility for cross-border coordination further down the hierarchy.

Second, while international relocations used to be a single career event, more and more employees are engaging in repeated staff transfers to a larger number of destinations, thereby increasing the intensity of global mobility over the course of their careers.

All of this adds to global leaders' boundary-spanning activities, not only across functions, business units and divisions within their organizations, but with external stakeholders, including regulators, customers, suppliers, NGOs and the media. Often these structural and geographic boundaries overlap, bringing associated relationship challenges.

For example, when leaders spend less contact time with each respective actor owing to geographic dispersion, communication is likely to be handled via ICT. While virtual, asynchronous information-sharing can sometimes be advantageous, some things, like trust and context for dealing with specific people and situations, require face-to-face interactions. This is especially the case in cross-border joint ventures: when there are differences in strategic interests, organizational values and management systems, it becomes all the more important to develop and maintain high-quality relationships. Often, the asynchronous, technology-mediated communication that we have come to rely on slows down coordination.

Another challenge for global leadership is the social friction that can arise from cultural misunderstandings, stereotypes or other biases. Global leaders operate in a wider cultural context, which will condition how individuals develop or resist shared identities and, in turn, relate to each other. The more global teams, cross-border task forces or international alliances there are, the more multicultural the encounters, making relationship challenges more likely.

Implications for Global Leadership

These task and relationship complexities impose particular demands on global leaders today.

The first concerns physical mobility. Despite advances in ICT, boundary spanning cannot always be fulfilled virtually. This usually means more air travel, which some consider a liability. For some executives, the frequent-flyer lifestyle holds limited appeal. Research shows that when considering cross-border activities, travel inconvenience is a major consideration, measured in terms of actual travel time rather than geographic distance per se. Managerial preferences for travel convenience even seem to determine multinationals' choice of foreign location over pure business needs. Add dual careers and unattractive assignment destinations to the mix, and the prospects of global mobility are negatively affected.

Psychological mobility, in terms of cognitive and affective flexibility, places another demand on global leaders. Neuroscience research finds that culture shapes our neurological wiring, meaning that global leaders will have to consciously work at adjusting their thought patterns and behaviors to interact with people and adapt to situational demands effectively. Fortunately, neuroscience research also finds that exposure to other cultures over time allows us to rewire our brains for different cultural settings.

The importance of affective flexibility is equally supported by neuroscience research. Researchers from the University of Southern California's Brain and Creativity Institute found that emotions vary in the time they take to process. In one experiment, an MRI scanner examined participants' brain functions as they listened to stories of people describing their experiences of physical and psychological or mental pain. The study found that, while the human brain reacts very quickly to demonstrations of physical pain, the more sophisticated mental process of empathizing with psychological suffering unfolds much more slowly.

Broadly speaking, this suggests that the more distracted or mentally overloaded we are, the longer it may take for us to access empathy and compassion. As work grows increasingly diverse, multicultural, complex and virtual, global leaders may find it harder to dedicate the requisite emotional energy toward others whose experiences feel far removed from their own.

Recommendations for Nurturing Global Leadership

Given these factors, we urgently need to nurture better global leadership. Here I outline three broad talent functions: hiring and promotion; development; and socialization. I recommend what can be done in each area, identifying the limitations and blind spots along the way.

This article is based on:  Tips for Nurturing Global Leadership Talent
Publisher:  IESE
Year:  2017
Language:  English
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