Managing the Global Workforce

Managing the global workforce involves overseeing employees and operations that span multiple countries, influenced by advancements in communication and technology. Organizations increasingly shift operations offshore to capitalize on lower labor costs and enhance market competitiveness. However, this globalization presents complex challenges, including difficulties in management, communication barriers, and cultural differences. Managers must navigate these issues while maintaining effective oversight of diverse teams and ensuring customer satisfaction. Expatriate and global managers play crucial roles; expatriates lead on-site teams while global managers coordinate across national borders. Successful management in this context requires understanding local cultures, legal frameworks, and communication practices to foster productive relationships. While globalization offers significant opportunities for growth, careful strategic planning and consideration of local dynamics are essential to avoid potential pitfalls, such as employee turnover and customer dissatisfaction.

Published in: 2023

By: Wienclaw, Ruth A.

Subject Terms

Managing the Global Workforce

Abstract

As communications and information technologies continually advance to meet the needs of consumers, an increasing number of organizations look to foreign shores to increase their market share and help them gain, or maintain, a competitive advantage. Lower labor and production costs in other countries make this an enticing alternative to domestic operations. However, globalization of an organization has advantages and disadvantages which must be weighed in a cost/benefit analysis to determine whether the decision to offshore some operations makes sense. Additionally, it is critical that the right management team be selected to lead these activities, including both expatriate managers who oversee host country concerns and processes and global managers who see and leverage the bigger picture across national lines. Care must also be taken to consider the impact of offshoring on customer satisfaction and to manage local operations in a way that minimizes any negative impact.

Overview

As the Information Age progresses and new technology becomes available, the world is becoming a global village. From a business standpoint, this provides a wealth of possibilities for making goods cheaper, offering around-the-clock customer service, and new approaches to solving problems by allowing diverse teams to work in tandem to reach solutions. In the late twentieth century, this would have been a much more onerous task. Meetings between team members in various countries required long-distance travel, jet lag, and loss of productive time while key personnel flew around the world. Modern employees in many organizations regularly sit at their desks or in a corporate conference room and talk to someone in another country using videoconference or teleconferencing. Similarly, documents to support long-distance conversations can be exchanged over secure networks almost instantly, further reducing the need for costly and exhausting long-distance travel.

Teleconferencing is not the only high-tech business tool that makes globalization possible. An email sent to a colleague in the building across the street can travel just as easily to a facility in another country. The international transport of goods and products is also much faster and cost-effective than it was in the past. Additionally, an increasing number of businesses provide services or handle information rather than tangible products. These commodities often do not require physical transport but can be transferred electronically. As a result, more businesses find it easy to serve a multinational client base and coordinate work between international branches.

Globalization is also an attractive idea because it makes it possible to get work done in countries with lower labor or production costs, gaining the firm a competitive advantage. For example, the hourly cost of a call center employee in the US may be US$10, but a call center employee in India may get paid only US$1.20 an hour. Similarly, the hourly rate of production workers varies widely, with those in Mexico paid the equivalent of US$2.38 per hour while their counterparts in Germany are paid US$25.08.

By taking a global perspective, a savvy organization can increase its market share and reduce its costs, an extremely attractive possibility. However, the opportunities offered by globalization are not unmixed blessings. From a management point of view, the internationally dispersed workforce is more difficult to manage. When branches or operations of the organization are in different countries, it is difficult to do management by walking around—the practice in which top management of the organization get out of the office and talk directly to their employees. This situation reduces communication flow within the organization and can have potentially disastrous consequences. Offshore operations do not run themselves; as good as telecommunications are, they are still no substitute for face-to-face encounters.

Another obvious problem with the globalization of the workforce is the language barrier. If the countries in which various branches or operations of the organization are physically located do not speak the same language, multilingual employees will be needed. Although effective communication can occur between the employees sharing a common language, those who only speak a single language will need to have their communication filtered through someone else. This can be an added expense, and the nuances of meaning in the two languages can be, literally, lost in translation.

Language barriers, however, are only one reason that international communication is difficult. Additionally, differences between cultures—the basic shared assumptions, beliefs, norms, and values held by a group of people—may cause people to misunderstand each other. Cultural differences have a great impact on how one can best manage employees in other countries and on how well expatriate managers—those who are not citizens of the countries in which they are working—adapt to their new environment. Psychologically, expatriates often experience symptoms of culture shock including homesickness, irritability, hostility toward local nationals, and ineffectiveness at work approximately four to six months after moving to the new country.

These cultural differences cut both ways. The expatriate manager must understand the culture of the new country in which they are working to understand how to best manage the employees working in that branch or operation. Differences in political and economic systems, as well as legal and industrial relation concerns, can have a significant impact on the way the organization functions.

Legal issues and requirements regarding employer-employee relations differ from country to country, a fact of which the expatriate manager must be aware. In France, for example, employees are legally allowed to work up to a restricted maximum number of hours per week. On the other hand, the ability of the employer to fire employees in France is severely restricted. A manager that does not understand or ignores these rules will not only run afoul of local culture, but the local legal system as well. Similarly, many European countries utilize formal work councils elected by the workers rather than labor unions or employee/management teams to negotiate issues between workers and management. These councils regularly meet with management to discuss policies affecting workers. A manager that does not understand the importance of these groups will soon run into difficulty on the job. In addition, organizations in European Union (EU) countries are required to “inform and consult” employees on an on-going basis about various actions that affect employees. Other issues such as minimum wage, maximum work hours per week and minimum number of holidays can also vary from country to country.

Although people may be people the world over, the differences in their culture and practices make managing an international organization a more complicated process than managing an organization that is completely located within one country. It is important for managers to understand that these cultural differences are real and to take them into account when determining the best way to deal with employees. In addition, such differences are also important for top-level management to consider when deciding whether to make the business international. Although labor may be cheaper abroad, high turnover, customer dissatisfaction, or restrictive local regulations are just some of the factors that can wipe out any potential advantage and make the move untenable. A careful cost/benefit tradeoff analysis needs to be done before making any such decision.

The literature widely agrees that one of the keys to success in the global marketplace is an effective international management capability. Although it may be tempting to apply the management styles, practices, and procedures that are successful in the home country to the host country, offshore facilities often require a different approach that considers local culture and laws. To be successful on a global scale, organizational management must break out of parochial stereotypes and think globally. This requires a willingness and ability to share information, knowledge, and experience throughout the organization and the ability to balance the demands and priorities of the organization, functions, and country as they emerge.

Applications

Managing multinational organizations or organizations that have expanded or outsourced functions to offshore locations can be a complicated process. Even though the advances in high technology that have occurred over the past decades allow organizations to be in nearly instant communication with other branches or functions that are geographically dispersed, this process is more complicated than if all the individuals are in the same time zone. Particularly in service industries, cultural differences can also affect the satisfaction of customers in the home country and impact future sales. Further, cultural differences can affect not only the best way to manage in a different culture; they can also affect the psychological well-being of the expatriate manager him/herself.

Global vs. Expatriate Managers. It has been argued that international organizations need expatriate and global managers to be successful. While the expatriate assumes leadership in international assignments, the global manager is engaged in a position with a multinational responsibility. This requires different skill sets, tolerances, and understanding of multiple cultures to be successful.

Expatriate managers need to have a multidimensional perspective, including extensive experience in multiple products, industries, functions, companies, countries, and environments. To be successful, expatriate managers also need to be proficient line managers with a track record of successfully operating strategic business units or with success on more than one international project. Expatriate managers also need to have good decision-making skills for day-to-day problem solving and strategic planning. Other skills required for success as an expatriate manager include political resourcefulness within the host country and the ability to build teams from a culturally diverse group of employees that can efficiently and effectively work together and achieve synergy.

In addition to these core competencies, the literature also points to several other skills that are helpful for the expatriate manager. Because of the distances involved between the offshore operation and the home country, it is essential that expatriate managers be facile and comfortable with the electronic exchange of information. Expatriate managers also need good negotiating skills, particularly if these have been proven in multicultural business negotiations. Good expatriate managers also need to be comfortable and effective in the role of change agent and capable of guiding the local organization through a change effort. To be effective, change agents need to have knowledge of how to conduct a change effort, an understanding of the organization, and sufficient power to implement the change. Good expatriate managers are also visionaries who quickly recognize and respond to strategic opportunities as well as political and economic changes in the host country. To be successful, they know how to effectively delegate tasks to others and allow local workers to participate in decision-making processes.

Expatriate managers are not the only type of managers needed for success in global business. The literature discusses three kinds of global managers that are crucial to global success: business, country, and functional. The global business manager can recognize opportunities and their concomitant risks across the functions of the organization. These managers coordinate activities and capabilities across functions and help maximize the benefits that are possible from international operations. The global country manager meets the needs of the local customers while satisfying the requirements of the host country's government. The country manager also defends the organization's market position. The global functional manager helps develop the organization so that it can continue to grow and increase its market share through strategic innovation. To do this, they look worldwide for knowledge or practices that will help the organization to be on the leading edge of the industry, and a champion of innovation that could help the organization grow.

Offshore Outsourcing of Customer Service. Increasingly, an organization's interaction with the customer is not finished once the purchase has been made. Local stores have customer service policies that enable them to deal with customer complaints and problems, offering returns, exchanges, or other services. However, retail outlets are not the only level at which customer service needs to be offered. Particularly for high-tech products, many manufacturers offer warranties or service plan options that allow customers to place a call and get help with using a product or troubleshooting difficulties they are experiencing. With the proliferation of high-tech products such as smartphones, laptops, and personal computers that are simplifying our lives both at work and at home, there is a concomitant need for customer support and service. This is particularly true as the quality of user interfaces improves, allowing customers with little or no technical expertise or hardware or software background to use products as if they were simple hand tools. However, when the device refuses to work properly, many customers—whether they are the professionals at their desk or online shoppers ordering birthday presents in the middle of the night—need to pick up the phone and call for technical assistance. Therefore, the organization needs to have a customer service department even though the sale has already been made. The way in which the customer is treated after the sale is completed goes a long way toward the decision as to whether they will buy from that manufacturer again.

Because of this fact, many organizations are constantly looking for ways to improve their customer service. Attaining this goal, however, can be an expensive proposition. Hiring good technical representatives for normal business hours is one thing; hiring good technical representatives to offer around the clock service is an entirely different—and more expensive—matter. One solution, of course, is to raise the price of the product. Another solution is to charge a fee for service. However, in many cases, neither approach is viable. By rolling higher customer service costs into the purchase price, manufacturers can easily find themselves priced out of the market. Requiring customers to pay an additional fee for aftermarket service can often result in customer ill will, particularly when other companies offer service for their products for free or for products where the customer has historically received free service.

To help solve this problem, many manufacturers increase the offshoring and outsourcing of technical support services. Outsourced work has been contracted to another organization even though it could have been done in-house. This is often done in situations where the contractor has lower personnel costs. Increasingly, such services are outsourced, moved offshore, or performed by local employees in another country with lower personnel or production costs.

The solution sounds ideal: The manufacturer can continue to offer customer service around the clock without raising prices. In addition, outsourcing means that the manufacturer does not have to put in place personnel, managers, and other resources and infrastructure that are necessary to provide customer service. This leaves the manufacturer free to focus on what it does best: Developing and producing high-quality products.

Unfortunately, particularly when the customer service function has been moved offshore as well as outsourced, this is only part of the story. In the past, outsourcing of the customer service function rose at an incredible rate, but has leveled off for several reasons. Research has found, for example, that nearly 80 percent of organizations that outsource their customer service function do not reduce their costs related to this service. In addition, offshore call centers often have higher turnover than in-house call centers, in part because of frequent abuse of employees by angry customers. This results in higher costs to the organization incurred because of repeated selection, hiring, and training processes for new employees. Further, newer employees have less experience and require more supervision, two additional reasons for higher costs. Extrapolation of research on this problem has led to the prediction that 60 percent of organizations outsourcing parts of their customer service function will lose customers as well as incur additional costs. One solution has been to expand the role of call center representatives to include "up-selling," or selling additional products to customers who have called in for assistance.

There are several steps that management can take to help determine whether outsourcing of such activities is a cost-effective way to do business. First, management needs to determine whether it is necessary to outsource the customer service function. Those processes that are key to the competency of the organization should never be outsourced. Second, management must consider what the customer will experience from the beginning to the end of the process. It is important that organizations devote sufficient resources to the process—whether it be in the home country or offshore—to ensure that the customer's experience is of the quality that the company would like associated with their name. For example, a technical service person who is not fluent in the language of most of the customers will generate ill will with already frustrated customers more frequently than those who are fluent in the language. For example, customer service representatives who speak the language of the home country as a second language typically will not understand the nuances of idiom, humor, or accent and may not, therefore, be able to prevent a customer's frustration from turning into anger. Because of this fact, customer service personnel need to be trained in how to deal with customers, calming them down, talking to them at the appropriate level, and actively listening to what they have to say without arrogance. Such considerations can give the organization better data for performing a cost/benefit tradeoff analysis and determining the feasibility of outsourcing the function.

In addition, before entering into a long-term agreement with another organization to provide customer service, management is well-advised to conduct a pilot study to see how well the proposed outsourced service is received by the public. Measures of success for these programs should include the efficiency of the calls (e.g., the number of calls handled in a given time period) and their effectiveness (e.g., whether the problem was solved, satisfaction of the customer). Finally, it is important that the organization continue to carefully monitor the effectiveness and efficiency of the contracted service to make sure that it is up to the organization's standards and is reflecting well on its name.

Terms & Concepts

Active listening: An approach to improving communication in which the receiver of the message attempts to better understand the message being transmitted, formulates a response based on this understanding, and responds in a way that clarifies the message.

Culture: The basic shared assumptions, beliefs, norms, and values held by a group of people. These may be either consciously or unconsciously held.

Culture shock: The psychological toll experienced by expatriates after approximately four to six months living in another country. Symptoms of culture shock include homesickness, irritability, hostility toward local nationals, and ineffectiveness at work.

Expatriate: A person who is not a citizen of the country in which they are working.

Global manager: A top manager who operates across national lines.

Globalization: The process of businesses or technologies spreading across the world. This creates an interconnected, global marketplace operating outside constraints of time zone or national boundary. Although globalization means an expanded marketplace, products are typically adapted to fit the specific needs of each locality or culture to which they are marketed.

Management: The process of efficiently and effectively accomplishing work through the coordination and supervision of others.

Management by walking around (MBWA): The practice in which members of top management of the organization get out of their offices and talk directly to their employees. This practice helps managers better understand the needs and concerns of the employees, reduces the filtering of the data, gives them quicker access to data, and improves communication flow throughout the organization.

Market share: The proportion of total sales of a given type of product or service that are earned by a particular business or organization.

Offshoring: The practice of relocating part of an organization's business to another country with lower costs. Offshore work is performed by local employees in the new country and was previously performed by domestic employees.

Outsourcing: Work that could be done by an organization that is instead performed by another company on a contract basis. Outsourcing can include support (e.g., cleaning and janitorial services), production (e.g., the manufacture of parts needed to make a product), or services (e.g., customer service provided by a contract organization).

Synergy: The process by which the combined product resulting from the work of a team of individuals is greater than the results of their individual efforts.

Turnover: The number of new employees that an organization must hire to replace those that have left the company in each period.

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Managing the Global Workforce

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Subject Terms

Managing the Global Workforce

Abstract

Overview

Applications

Terms & Concepts

Bibliography

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