Choosing a key executive to head up a firm’s foreign location can be tricky business, according to Duncan Otis, principal of Otis Associates, Inc., an international executive search firm in Minneapolis. The first rule? Don’t hire an American.
Otis was president and managing director of Cray Research’s subsidiary in Japan from 1983 to 1985. He also held executive positions at Mitsubishi and other companies while living in Asia. He speaks Japanese and Thai.
Now, Otis focuses on helping companies recruit in-country or native citizens for executive-level positions. He also helps coach new managers as they try to integrate into American companies. In a conversation with TCB, he explained that getting them acclimated to the company is key because turnover at the executive level is extremely expensive.
What are the advantages to hiring in-country versus American executives?
The trend now has been to hire locals for local markets. Some of the advantages to hiring in-country managers are:
1. It’s cheaper. An expatriate often comes with a family, housing needs, sometimes extra “inconvenience” pay, school fees, home-leave expenses, et cetera. A local doesn’t need most of these things.
2. Some markets need several years to develop. Internal family pressures [can] cause an expat to bail early, [resulting in] delayed return on investment.
3. It’s easier to train an indigenous manager to the corporate culture of his or her Minnesota-based employer than to teach a busy American executive the language, business practices, and selling methods in a foreign market.
4. In most cases, the expat doesn’t expect to serve in a foreign market for more than two to four years. Then he or she needs to be integrated into a new foreign market or back into the hiring firm’s U.S. operations, which is often quite difficult—‘out of sight, out of mind.’
It’s probably best for the Americans overseas to be in support and advisory roles and not in the top spot. Maybe it’s a poor analogy, but a delta of geese don’t want the lead goose to be a hawk or a sparrow. They want a goose.
What obstacles might a newly hired Thai executive in Bangkok face during her first year on the job for a Minnesota company?
The hiring firm must make its practices very clear up front. If certain practices in the target market are anathema to the hiring company, in terms of ethics and laws [i.e. bribery], the company has to make it clear to the new hire that these practices are forbidden. And yes, this could mean that some business—at least in the short term—may be lost.
If the hiring company demonstrates by word or deed a ‘three monkeys posture’—see no evil, hear no evil, speak no evil—it may leave itself open to [legal] problems down the road. Medtronic does an excellent job at making its business ethics clear, and has closed down operations in certain countries where the general manager can’t abide by Medtronic’s standards.
