Launching a global expansion of your company’s marketing and operations requires careful organizational planning. In other words, it’s more than numbers and expected synergies. It’s getting the people and leadership decisions right and doing it in a timely manner. Once you have decided to take this important step, what do you need to think about? What pitfalls do you need to avoid?
One common way to expand into new countries of operations is by acquisition. Based on my years of experience in this area, here is a game plan for you to consider for integrating foreign operations via acquisition.
Identify your leadership
This first step is critical for preventing a slowdown in business and indecision on the part of customers. The sooner the customer, employees and suppliers know who they are working with the better. There will undoubtedly be uncertainty in this important group when the acquisition is announced.
Determine the two or three top level people in the organization you have acquired that are best suited to head operations within your company. It may be helpful to analyze the organizational due diligence that you did leading up to the acquisition transaction. Executives’ track record and capabilities should be considered, but equally important is another factor: who can you best integrate into your still mostly-domestic organization? Who within this group can adapt to change and who has the best customer relationships. Take a hard look at how prepared they are to buy into the way you want to run your international operations. Consider the possible cultural issues of working with a U.S.-owned company. An example may be a difference in culture regarding the goals of the business. In the U.S. we understand the profit motive, but in some cultures they may view the primary business purpose as one of providing employment.
The alternative to local leadership is to select an expatriate from your US management ranks or hire new leadership locally. In my experience, it is best to have at least one person from your domestic organization in a leadership role, but maybe not the top position. For example the top GM position might be the local and the controller the expat. Again it is important to put this in place quickly even at the risk of making some initial mistakes.
Announce the new leadership team
It is important that the U.S. Top Management announce the new leadership team in person to the organization and possibly some of the key customers. This shows support and commitment. Without leadership in place people lower down in the organization will get their information from speculation and rumor. This is never a good idea for morale or promoting buy in!
Put in place a top line integration team comprised of both domestic and local leaders
Here I see a place for an outside ongoing advisory role of an experienced person who has knowledge of working in that country and culture. This could be filled by a Newport Partner!
Establish consistent metrics and accountabilities that make clear your expectations
Train the global leadership team in your corporate culture and management philosophy. This can take the form of a whole day session where you lay out how you do business, how you set goals and expectations. Example: explain that your company’s culture is pay for performances and how your management incentive programs are aligned with corporate goals and strategy. Explain objectives for cash flow and market share. This is a good place to discuss your company’s 4-M’s.
Bring your HR specialists into this process
They will need to coordinate employee communications. HR can help design a way for employees to know what is going on all the way through the process so they are not subjected to speculation and rumor. Employees should clearly understand the timeline for organizational change.
Understand legal constraints for organization changes
For example, in many countries you may have to give 6 to 12 month notice to terminated employees. Another may require you to establish an employee consulting committee for people decisions. In the case of individual employee contracts there may be buy out requirements.
Over time you need to train all employees in your corporate vision, mission, values and culture.
Buy in and understanding is important for long term success.
Make the top management team visible to the new foreign employees
The company’s top management team should be highly visible to the global management team, traveling to major locations so that employees of the acquired company know who they are and feel connected to the larger organization.
The following are some common mistakes to try to avoid when going global:
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Understanding the numbers for the business plan and the expected performance metrics--but not the people and their capabilities.
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Failing to consider the local culture and environment. For example, my experience is that managers in some cultures may be less candid about expressing disagreement and acknowledging conflict than Americans. When they acknowledge your directives you think they are agreeing to implement when all they are indicating is that they heard what you said. It becomes very frustrating when you then leave and expect something to happen and it does not!
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Not preparing the organization for change. At the time of acquisition of foreign operations, the organization must understand that there are going to be some changes. When you acquire foreign operations do not try to reassure people that “nothing is going to change. “
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Developing an unrealistic business plan and timeline. You must take an honest look at what you can get done and in what time frame, acknowledging constraints.
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Not understanding how global customer needs and desires differ from those in the U.S.
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Placing expat U.S. managers abroad without adequate due diligence as to their fit or training. You need to involve their entire family in the decision, to make sure they can make the transition and adapt to the new environment.
A clear picture of how you will incorporate operations in one or more countries after an acquisition is essential—to deciding whether to do the transaction in the first place and then to realizing the value you intend to build.
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Contact Norm at norm.boyd@newportboardgroup.com
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