Developing Leadership in Global Organizations 215 of leadership but also the context-specific and variable ‘‘hows’’ of leadership However, this is easier said than done The reality is that a lot of money and time are invested in leadership development with limited ROI Given this track record, what should organizations do? For leadership development efforts to deliver the desired results, a successful comprehensive and truly global approach to organizational leadership development should: (1) foster an understanding of the uniqueness of experience and environment, (2) maintain a focus on cultural heritage and organizational future, and (3) adapt the leadership model and approach Understand the Uniqueness of Experience and Environment Just as streetwise business operators get to know the customer and sophisticated organizations invest in consumer insights, leadership development specialists need to get to know who the participants are Because people are different around the world, organizations need to look beyond their current hypotheses and explore the causal factors that shape how leaders develop, with the purpose of constructing an effective approach to leadership development Four elements that need to be considered when understanding the uniqueness of experience and environment include the leaders’ unique backgrounds, their thought processes, their home societal structures, and the dominant religion of their development cultures Leader’s Unique Background Leadership development specialist need to scrutinize and discover why the differences exist and understand their assumptions as they influence how people think and behave and thus grow in their leadership capability This requires leadership development specialists to set aside existing notions and constructs about their specialties while they probe the local markets to understand who the people are and how they develop These three fundamental questions need to be contemplated in the exploration process: Why leaders learn? How leaders learn? What leaders need to learn? 216 Going Global When addressing these questions organizations should consider individual leaders or tightly aligned markets rather than contemplating universal answers for leaders on a global level Two risk factors are involved in this practice: (1) this activity is heavily reliant upon anthropology and sociology, a skill set not traditionally taught or practiced in organizational leadership development departments, and (2) without broad international experience as an expatriate including significant experience in various countries, it is difficult to set aside individual experiences and be able to question why things are as they are in a particular culture—let alone draw conclusions that affect leadership development For example, in the midst of a major leadership development effort, a leading telecom company with an operating office in one of the emerging markets realized that the leaders in the program came from numerous backgrounds In this particular operating company, they had 35 different nationalities and all but nationality was working outside of its home office Their leadership development specialist, who had extensive expatriate experience, recognized this reality and hit the pause button to explore what this meant for how they lead and what it will mean for how leaders will develop They explored the three fundamental questions mentioned earlier and concluded that they needed to take a deep look at their leaders’ backgrounds and adapt their global program accordingly Thought Process Human cognition is not the same all around the world, and at the most elementary level people in the East and West have different basic thinking approaches Psychologists have assumed universally that Westerns and East Asians have maintained very different systems of thought For example, Westerners have a strong interest in categorization, which helps them to know what rules to apply to the objects in question And they rely on logic to play a role in problem solving Conversely, East Asians attend to objects in their broad context and how they relate to one another The need to explore locality in relationship to leadership is apparent through this description of the Western and Asian basic thought processes Leadership development specialists would be Developing Leadership in Global Organizations 217 wise to consider the system of thought as they explore the leader’s background This understanding will aid organizations’ efforts to maximize the investment and results from leader development activities For example, if a company that is based in China and has operating offices throughout Europe and North America decides to export its home market leadership development program to all of its global leaders and managers, it needs to allow for the different systems of thought in order to leverage the natural abilities and thinking processes of the leaders in Europe and North America Social Structures Social structures are also distinct between various cultures and environments, and they affect how a person develops as a leader The way in which groups relate to each other is based on relatively enduring patterns of behavior and relationships within social systems Norms become embedded into social systems in such a way that they shape the behavior of leaders within them In and of themselves, social structures are very complex This complexity intensifies when attempting to cross cultures or integrate various social norms and patterns Religion As a developmental consideration, religion is more than an approach to spirituality Unlike the Western idea of the world being divided into two comprehensive domains—one sacred and the other profane—on a global landscape religion presents a common quality for societal character Religion is a communal system of belief focusing on a system of thought from which come moral codes, practices, values, institutions, tradition, and rituals Leadership specialists need to understand the broader impact of ‘‘religion’’ on people as members of society Religion shapes personal practices and group rituals stemming from shared conviction; it is a ‘‘way of life.’’ Unlike the homogenous impact of religion when operating in a single market or across European and American markets, on the vast global front the breadth of religious impact on how leaders develop needs to be sought out 218 Going Global and understood Additional thoughts to consider when exploring a society include: • What is the societal (and parental) support for development and why is it as it is? • What are general beliefs and what stories shape them? • What are the learning habits and why are they as they are? • What is the educational model and approach? • What does an individual’s experience actually include? • Individual’s cultural background and what created the culture • What is the perceived value of learning to local culture? • What developmental patterns existed throughout ancient and modern history? • Where is the culture in its current life cycle? • How were the potential leaders parented and how does authority act? • What types of noneducational activities are relied on in the local culture that build leadership habits? Leadership development specialists need to have the skills of great connoisseurs; they need to become fully acquainted with and appreciate the differences between the various cultures Over time, they will develop a taste for both views—the home office and their leaders’ backgrounds Maintain Focus on Cultural Heritage and Organizational Future In addition to understanding the uniqueness of experience and environment, it is the role of the leader development specialist to understand the backgrounds, to remove barriers, and to build a bridge between the cultures of the leader and the organization so that they can graft together the local identity with the multinational company’s environment Success resides in knowing both sides and how to connect them One of the more important elements in grafting the leader’s identity with the company’s environment is for the development specialists to understand the depth and development of potential leaders’ societal backgrounds This will facilitate bridge building and help leverage the most effective development approaches Developing Leadership in Global Organizations 219 Most global organizations hold the unconscious belief that potential leaders: • Are educated, most likely through public education, in a classroom that utilized active learning • Have an understanding of the idea of organizational life as it is constructed via extracurricular activities at the elementary level and supported in most social interactions • Have a consistent underpinning stemming from the influence of a Judeo-Christian ethic absorbed through educational programs and cultural rhythms • Will pursue and be supported to develop as leaders • Have an understanding of operations from their first jobs held • Operate from tightly aligned commonalities with coworkers in their organization But when the company explores the global settings, these unconscious beliefs most probably not align with those of the regional cultures Theories or hypotheses about environment and background need to be tested through behavior and then modified depending on the outcome of the testing The uniqueness of individual experiences creates the uniqueness of personality An individual’s hypotheses about his or her environment not only are a basis for describing the environment but also seriously influence the way the individual behaves toward the environment Success in leadership development comes as organizations are able to graft the environments and backgrounds together Attention needs to be given to maintaining focus on the cultural heritage of the leader and the organization’s future while bringing the two together Adapt the Leadership Model and Approach Finally, leadership development activities should be largely influenced by society and the dynamics of the current workforce Thus, the next step after compiling the leader’s dossier is to analyze the existing leadership development activities and discover how they can be modified or adapted to maximize the investment and leadership potential in the various markets This is the point 220 Going Global where organizations should understand the universal components and explore the factors that need to be understood in order to ‘‘localize’’ and shape the leadership model Operating companies around the world express that their home offices have difficulty in that they have researched and invested heavily in current programs, yet the field offices know that thee programs need to be modified in order to have a greater impact If a global organization is serious about developing leaders, it will need to recognize the priority of this approach and make the necessary adjustments Middle East Case Study When it comes to leading in the Middle East, people often ask, ‘‘Is it any different than leading in another country or region?’’ The answer is a resounding ‘‘Yes!’’ For anyone working in the Middle East this is a question that cannot be ignored, as it is foundational for business success Looking around the globe it is clear that leadership initiatives are not the same, nor should they be It is a grave mistake to think that you can import and export ways of leading in the same way that countries import and export oil Successful leadership development requires that you first identify the rhythms and nuances that are present in that culture Next, focus on understanding the leadership need(s), and establish where they originated from and why they are as they are Only then should you put energy into seeking the solution of how to develop the leaders This is especially true in the Middle East, where people are mistakenly importing Western approaches to leadership development without giving consideration to the local cultural rhythms Consider a recent example from Beirut, Lebanon, where a training course in time management was being conducted to rectify the notorious problem of arriving late for appointments and events On the surface, it is easy to think that all time management skills around the world are similar So the western training company reached into their toolbox to fix this perceived problem In the midst of their training, the solution was, ‘‘if you make better use of your time then you will be on time.’’ Developing Leadership in Global Organizations 221 Knowing Lebanese culture, I found this to be laughable Even more hysterical is how the trainer proceeded to teach the Lebanese managers to use their time The solution was to turn off mobile phones and only answer calls for two hours each afternoon At that suggestion, one could see the Lebanese managers’ eyes glaze over Why? This development solution had a lack of understanding of the local culture and it was addressing a problem that was not really there In Lebanon (and most of the emerging markets), the mobile phone is the dominant method of communication and a central component of life—they never turn off or ignore their mobile phones This lighthearted example is meant to emphasize what can happen when there is a lack of understanding that situations and cultural rhythms are different and that leadership development solutions need to be rooted in the local society Why people come into the Middle East (or for that matter any part of the world) and propagate their solutions without an understanding of the local market and needs? At the time of my research, there was a deep sentiment that Western leadership development solutions would not work in the Middle East, yet many people were still reading Westernoriented business books and attending Western-based leadership seminars in search of success even though the content could not be fully implemented Why would this be? In order to develop leaders successfully in the Middle East, you have to understand the culture, you have to know what influences it, and you should lead accordingly When addressing the Middle East, it is critical to look into its history and notice the rich culture and massive achievements Successful leadership development in the Middle East (ME) requires an understanding of the elements that influence the society This case study shows an ME-specific model of leadership development called the ‘‘Patriarch Model.’’ If applied in the right context, this model will be the framework for successful leadership development in the Arab world It is important to note that there is no such thing as ‘‘one’’ Middle East or Arab world This region is made up of more than 15 countries, half a dozen different religions, and countless regional- and tribal-specific ways of doing things So even in a tightly aligned geographical region, 222 Going Global there are differences to be considered Although there are many differentiators, a quick look across the Middle East will reveal a few commonalities This case study utilizes the commonalities in identifying the elements of influence Elements of Influence in the Middle Eastern Society The most important thing to when leading in the Middle East is to become familiar with what has and does influence the culture The following influences—the family, Islam, family business, and colonialism—have shaped Arabic business into what it is today Likewise these elements shape the way people develop as leaders and should be apparent in a global organizations program Influence of Family: Patriarchal and Loyal Unlike in the West, the influence of family in the Middle East is very strong and has a tremendous impact on how people lead and what employees are looking for in their employers At the very least, organizations need to be aware of this influence Why does the family dynamic have such a powerful influence in the corporate settings? Because the Arab world is a patriarchal society and family focused In this society, the father is the central figure and he wields a great amount of authority In the traditional Arab family home, there is a healthy respect and reverential fear of the father as the family looks to him for leadership It is also typical that this leadership will pass on to the eldest son The patriarch in the family understands he has the responsibility for the family or tribe and does not take it lightly The business environment is a facsimile of this family structure Employees look to their boss for strong leadership and expect to experience what they would at home At the same time the boss embraces his responsibility for the stewardship of his employees In the Arab home it is common to have centralized power; however, in the business world this often causes problems and creates blockages for the work The bottlenecks in the decision making, the minimal delegation, and the vast amount of taskoriented leadership are by-products of the misused patriarchal patterns The influence on the patriarchal family structure can be seen in the structure of organizations in which top-down Developing Leadership in Global Organizations 223 authority is the norm The natural outcome of centralized power is control, and this controlling mentality will limit a leader’s ultimate influence and success The tight locus of control and power that is experienced in the business context comes from mimicking the home style of leadership For an organization to develop leaders in the Middle East, it is essential to understand where these patterns come from and why they exist; this understanding is foundational to success Group Orientation and Relationships There is also a strong group orientation in the Middle East An Arab family is a very tight-knit group of people and the extended family is the locus for most social interaction They live life out as a group, so much so that it is quite common to find cousins as best friends How does the group orientation work in a patriarchal setting? On the surface these practices seem to be paradoxical but in reality they work well together Even though legitimate authority rests ultimately on the apparent absolute power of the patriarch, he nonetheless takes account of family opinion when making decisions Even with his given authority, the good patriarch creates a consultative environment where the group orientation supports a group approach to making decisions The business context is both hierarchal and consultative This consultative structure offers the basis for understanding how decisions are made in the Arab world It is fundamentally different than in the West, which primarily endorses individual decision making The family takes an active role in deciding whom to marry, where to work and live, and even what type of car to drive, and so forth Stemming from the family nature of decision making comes the consultative approach to decision making in Arab organizations Westerners working in the Middle East often incorrectly criticize their Arab counterparts for not making a decision; they not understand that the reason for this behavior is based on historical decision-making rhythms They are accustomed to being part of a group decision-making process and then looking to the patriarch to make the final decision 224 Going Global The impact of relationships is also felt in the way that business is carried out In the Arab world, business is based predominantly upon relationships In this highly relationship-oriented society each family works toward the long-term accumulation of position, prestige, standing, relationship, and respect Honor and Loyalty Because of the relational society comes an intense focus on loyalty It is expected and often guaranteed as leaders surround themselves with subordinates that they can trust Another difference in the Arab world is the practice of giving and preserving honor The influence of the family is central to understanding the Arab manager’s use of time during the working day When a close family member appears at the office of even a very senior manager, it is regarded as improper for the demands of organizational hierarchy to take precedence over the obligations due to family In other words, he is choosing to give honor to his family before giving priority to his work Leadership is a complex phenomenon in Arab organizations and is related to the ideal of honor This is challenging concept for western-oriented managers because the West is a guilt-orinnocence culture where something is either right or it is wrong The Arab world has a very different focus: it is an honor-or-shame culture These two very diverse orientations generally shape the way work is conducted Influence of Islam When trying to understand the business culture and provide leadership in the Middle East, it is important to take into account the influence of Islam This is not speaking of the influence of the local mosque, but the cultural underpinning of Islam in society Similar to the way the West has been shaped by the practice of Christianity over centuries, the Middle East has become what it is from the influence of Islam In the Arab world it is believed that Islam is more than a religion that concerns itself merely with the spiritual aspects of life Islam is literally a way of living that embraces the spiritual, 228 Going Global The ‘‘Patriarch Model’’ of Leadership Development Originally a patriarch was a man who exercised autocratic authority over an extended family The word patriarch is a composition of ‘‘father’’ and ‘‘leader.’’ And that idea is exactly what this model is built around—a leader with fatherly responsibility In the West the concept of being a father has a tendency toward viewing parenthood primarily in material terms The belief is that the role of the father is to see to it that his children are well fed, obtain a good education, and have a good start in life Even a limited understanding of Islamic principles will convince one of how erroneous and shortsighted such a viewpoint is This point is encapsulated in the thoughts that the direction of a child is attributed to the role of the parents The father is in essence the role model of the child and has been given the pedestal of leadership in the home The man (father and husband) is the keeper and leader of his family Leadership does not imply the right to be overbearing, but in actuality carries the meaning of responsibility The father is the one who will be held responsible for the development and nurturing of his children A tremendous responsibility has come to bear upon his shoulders To view this only in materialistic terms is the height of folly, for one has to realize that sustenance and direction are the father’s responsibility The ‘‘Patriarch Model’’ of leadership is based upon the understanding of the modern patriarch and the key focus is on developing abilities for the future release of control and empowerment There is an inherent pride among top Arab leaders that they made it to where they are without leadership development The question is, ‘‘did they?’’ Perhaps a few did, but most likely they did not Their version of leadership development just looked different from many of the imported programs Much of their development would have come in the way that a father develops a son rather than from a formal program In Arab culture, development starts at the knee of the mother, continues into the classroom, and is broadened by their exposure to people and ideas During the entire time, the father is the guide who sets the direction In the ‘‘Patriarch Model’’ it is a leader’s responsibility to develop the abilities of his followers The best way to mirror this is to learn from the father-son relationship First, the father relies Developing Leadership in Global Organizations 229 on the mother in the formative years to establish the rooting Then a father will take his son with him to observe work and the father (leader) in action After a period of observation, the father will discuss with the son what is happening The focus is on developing the way the son thinks and what he sees When the father is comfortable with the son’s thinking patterns and behaviors, he will begin to give him responsibility and the opportunity to demonstrate his ability and value Simplifying how to develop leaders in the Middle East comes down to one word—patriarch It is imperative to understand what this means For some it is a confusing concept as they translate it to mean ‘‘father’’ in the western sense This is not what a patriarch is—a patriarch is more than just a father who provides financially for his family He is a leader with a truly deep fatherly responsibility Oftentimes organizations think they have the solution for how leadership development should be carried out in the Middle East Instead of understanding where they are working, they just plow forward and commit serious faux pas What they need to is to begin with learning what influences the society In the case of the Middle East, this means understanding the influence of the family, Islam, family business, and colonialism Given this basic understanding the ability to develop leaders greatly improves Following the understanding of culture, organizations should apply a locally relevant approach to leader development similar to the ‘‘Patriarch Model’’ that is present in this case study Although this case study relied upon the geography of the Middle East, the principles are applicable for any culture or region What is necessary for developing leadership in global organizations is to understand the local influences and adapt the leader development model accordingly to maximize on the potential Conclusion Parenting is a conservative practice, and most rely on the same practice that their parents used, even if they know it may be out of date Likewise, organizations tend to be conservative when they attempt to develop future leaders and follow the same routines 230 Going Global that they and others have relied on over the years They this even if the approaches are outdated or, in the case of global organizations, when they not export well After all, those approaches have served them well But what if there is another way to develop leaders, a better way? A corporation’s leadership development strategies should address the complexities of managing an increasingly diverse and global workforce Global leadership is more than the popularized concepts of thinking globally, appreciating cultural diversity, building partnerships and alliances, and sharing leadership It is about maximizing the potential that lies in each and every location that a multinational corporation operates from Even though, in most markets around the world, there is an admiration for Western ways, global organizations will be well advised to leverage the local culture and combine it with their home office practices to create a globally significant program In order to maximize the return on investment in leadership development and to capitalize on the latent leadership potential in all markets, organizations need to break from the centrally created model and learn to balance the universal knowledge with local needs This includes (1) understanding the uniqueness of the leaders’ experience and environment, (2) maintaining focus on cultural heritage and organizational future, and (3) adapting the global leadership model and development approach to be harmonious with the cultures of the potential leaders Global organizations are not ignorant about these points; rather they recognize how challenging this is In the private corridors, they report that their global environments are so hard to work in that attention is diverted from maximizing the potential there and is placed on developing efficient programs, thus utilizing the ‘‘cookie cutter’’ approach, which facilitates the fast-profit motive But the question is, how does this resolve the original dilemma of ‘‘Why is so much invested in developing leaders, yet we don’t have leaders?’’ CHAPTER Strategic Surveying in the Global Marketplace and the Role of Vitality Measures Jeffrey M Saltzman and Scott M Brooks As the global economy descended into recession in 2008, organizations struggled for survival For many, short-term performance became the only focus Long-term performance would not matter should an organization perish Very few industries and very few corners of the planet were spared from financial threat As the recession seemed to stabilize, many organizations realized—at least in the abstract—that the economic lull could be used to build the discipline of becoming more effective Certainly cost cutting forces prioritization of what an organization values But questions loomed: What kinds of cuts satisfied the needs of current performance, and what kinds sacrificed future potential? What kinds of opportunity could emerge from this crisis? Although these questions are brought into sharper focus by the recession, they highlight the general objective of optimizing present-day operations while investing in the innovation required to remain vital into the future In fact, according to the Random House Dictionary (Dictionary.com, 2009), the second definition of vitality is the ‘‘capacity for survival or for the continuation of a meaningful or purposeful existence: the vitality of an institution’’ (italics in original) Some of the data we have seen suggests that many organizations in this time period are more strongly focusing 231 232 Going Global on getting their internal houses in order, reorganizing, slimming down, cutting their way to prosperity (perhaps in their view), and putting somewhat less emphasis on modifying products and services to meet current customer desires Other organizations are striking more of a balance between internal efficiencies and retooling products and services to increase their appeal given the current market conditions Although there can be many metrics to address the vitality of an organization, this chapter deals with what employees can tell us that helps to predict and manage future success We will begin with an illustration of global research addressing employee confidence, a construct which taps directly into employee evaluations of the future Results from countries representing the world’s dozen largest economies will highlight a fundamental message: While cultural and national differences may challenge our ability to compare employee opinions across countries, there is still very valuable information remaining enabling us to predict performance, to draw conclusions, and correspondingly to manage the global workplace We will then draw the lessons of employee confidence into a larger model of organizational vitality, built from a cross-pollination of organizational literatures There are direct implications from this model for monitoring and managing global organizations via employee survey techniques Setting the Global Stage For multinational organizations, one goal of a strategic employee survey is to collect a uniform metric that can be used as business intelligence, information gathering, or a monitoring measure to determine how the organization is performing and where the organization can most benefit from interventions There are many challenges to the successful completion of this goal, and among them is the nature of globalization itself— the attempt to apply in a uniform fashion a measure to an environment that is anything but uniform The word globalization often implies a uniformity that is just not there, rather than diversity and interdependence However, if we concluded that the extent of global diversity prevented any kind of systematic comparison across global units, Strategic Surveying in the Global Marketplace 233 then we would be at an impasse One fundamental premise of this chapter is that people are more the same than different, and that although multinational organizations spread across a significant array of cultural, economic, functional, and legal differences, an organization by literal definition is attempting to assert a degree of ‘‘sameness’’ or consistent governance across the enterprise In general, if one is on a search for cultural differences, they can be found The larger question is, however, are those differences of enough substance within the workplace that they should affect day-to-day management decision making and the operational characteristics of an organization? More concretely, they impinge on our ability to predict traditional measures of financial performance? This point is explored in the program of research discussed in the following section Case Study: Employee Confidence The premise behind employee confidence is that individual employees know how their organization is faring, each from his or her unique perspective And though no employee, including the CEO, has a comprehensive or total understanding of how the organization is doing, by collecting employee confidence information from the employee population or a significant cross-section of the employee population, in aggregate that information represents a ‘‘group intelligence.’’ If asked the right questions, the providers of this group intelligence will shed light on organizational performance–related issues, offering not only a very good predictor of what is actually happening within the organization but also a road map to organizational improvement, suggesting specific interventions to enhance performance This ‘‘employee as observer’’ framework has been examined for 30 years (for example, Schneider, Parkington, & Buxton, 1980) By this definition, organizations that exhibit a higher level of employee confidence are more vital Employee confidence is measured by asking the employees of an organization about their perceptions within four key areas, two related to organizational performance and two that are related to the individual’s personal situation within the organization A high level of employee confidence is achieved when employees perceive 234 Going Global their organization as being effectively managed with good business processes, competitively positioned with attractive products or services, and when they believe that they have a promising future within their organization and, if needed, transportable skills that would be attractive to other employers Measuring Employee Confidence Employee confidence consists of two subdimensions, organizational confidence and personal confidence, and each of these subdimensions has an internal and external factor The internal part of organizational confidence focuses on the internal functioning of the organization (that is, the degree to which it is managed well, the effectiveness of business processes, and its financial health or discipline) The external part of organizational confidence focuses on the environment in which the organization operates (such as industry health, competitiveness, attractiveness of products and services) The internal part of personal confidence focuses on the employee’s future with their current employer and is the traditional driver of how employee loyalty was generated from the employee’s perspective (for example, job security, promising future, preparation for future) The external part of personal confidence asks about employees’ perceptions of what would happen to them if they had to go onto the job market (that is, skills would allow them to find a similar job, with similar pay, and others are hiring people with their skills) External personal confidence represents ‘‘career’’ security, the ability to work within your profession, rather than ‘‘job’’ security, the ability to remain with your current employer, which is represented by internal personal confidence As a model the employee confidence concept can be depicted with a × chart as shown in Figure 9.1 For the study described below, each cell of this × was measured using three corresponding survey items (Saltzman & Herman, 2009) Beginning in June 2008, quarterly Web surveys were administered to a global sample of approximately 15,500 full-time employees in the private sector, at least 18 years old and working in companies with at least 100 employees The countries Strategic Surveying in the Global Marketplace 235 Figure 9.1 The Employee Confidence Framework Internal External Organizational Effective management and business processes, financial success Competitively well positioned, demand for products, attractive to customers Personal Job security, bright future at organization, long-term skill development Transportable, up-to-date skills, equivalent job opportunities available elsewhere included in the sample were Brazil, Canada, China, France, Germany, India, Italy, Japan, Russia, Spain, United Kingdom, and the United States, representing approximately 75% of the world’s gross domestic product (GDP) Five thousand employees were included from the United States, 1,000 from each other country with the exception of Russia, where 500 were sampled Respondents were drawn from panels that have agreed to answer surveys in each country (the respondents from administration to administration are not necessarily the same) The samples were checked to ensure that they conformed to the demographics one expects within each of the countries included (for example, 50% male, 50% female) Twelve core employee confidence items and various outcome measures (such as pride, turnover potential) were asked, along with consumer intention items and those related to demographics and organizational characteristics In addition, respondents were asked to provide the name of their organization, enabling matching to publicly available financial information Employee Confidence Findings As of this writing, five quarters of data have been examined within the employee confidence framework: the June 2008 baseline and four subsequent quarters Within the sample, the responses associated with employee confidence follow a normal distribution and have been found to relate to multiple business performance outcomes and financial or economic measures 236 Going Global Gross Domestic Product (GDP) A rank order correlation between change in gross domestic product and employee confidence for each of the 12 countries in the sample revealed a significant rho of 87 (replication six months later yielded 77) The BRIC countries (Brazil, Russia, India, China) in general had the highest employee confidence scores In other words, countries with higher levels of employee confidence are more likely to be those with rapidly growing economies (see Table 9.1) The significant relationships demonstrate that whatever the cultural component of employee confidence, there is a substantial amount of useful and meaningful country-by-country variance related to economic factors In fact, the most meaningful trends in employee confidence from June 2008 to June 2009 can be readily mapped to economic events and business news within each country (see Table 9.2) Note that these qualitative analyses Table 9.1 Employee Confidence Aligns with Rank Order Change in Gross Domestic Product Country Confidence Rank Order Δ2006 GDP ΔGDP Rank Order India 9.70 Russia 8.10 United States 1.82 China 11.40 Brazil 5.40 Canada 1.65 Germany 1.71 United Kingdom 1.43 Spain 1.84 France 10 1.14 10 Italy 11 −.04 12 Japan 12 1.01 11 Three of four rapidly expanding economies Three of four slowest growth or shrinking economies rho = 87 Notes: Employee Confidence measured in June 2008 Change in Gross Domestic figures were as of 2006, the most recent available for all countries 101.4 98.9 102.3 99.6 8.4 1.6 12.5 8.1 France Canada China India 107.2 93.8 96.0 97.8 6.8 −0.7 3.9 Brazil Japan Spain Italy 100.9 99.0 7.6 Germany 12 99.0 4.6 UK Russia 98.9 5.3 2Q09 U.S Δ 2Q09 − 1Q09 92.8 92.1 94.5 100.4 88.9 91.5 89.8 97.3 93.0 91.4 94.4 93.6 1Q09 100.3 100.5 93.6 106.4 98.3 99.3 100.7 99.9 101.5 101.3 102.6 101.4 4Q08 101.3 100.1 99.5 105.7 101.6 100.1 99.9 105.4 99.6 100.7 103.0 103.4 3Q08 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 2Q08 These ranking also match events as reported in The Wall Street Journal ; there is exceptionally high unemployment in Spain, and the United Kingdom’s economy is posting sleep drops, which are dashing hopes for a quick recovery China and Russia strongly bounced back, as did France, India, and Germany in 2Q09 Four of 12 countries equal or exceed initial score of 100 Tokyo, April 30 (Reuters) – Japan’s industrial output rose more than expected in March (1.6%), the first gain in six months Shanghai July 16 (New York Times)—Fueled by an ambitious economic stimulus program and aggressive bank lending, China’s economy grew by 7.9 percent in the second quarter of this year, the government said Thursday, a surprisingly strong showing given the world economic crisis Brazil has the most positive employees relative to 2Q08 Brazil’s “growth cycle outlook” was also the only one to be rated “downturn” rather than “strong slowdown” in December 2008 by the OECD Table 9.2 Employee Confidence Percentage Scores 238 Going Global focus on changes in employee confidence Using each country as its own baseline helps to highlight that growth or decline are less influenced by the myriad factors that make global comparisons difficult Note that each country’s score was set to 100 in June 2008, and changes since then are a proportion against that baseline Table 9.2 shows whether a country’s employee confidence has increased when compared to the June 2008 baseline (numbers above 100) or whether it has declined (numbers below 100) This method provides a reasonably culture-free way of assessing change within each country, as each country has the same starting point of 100 regardless of raw score It could be argued that certain cultures would have different ‘‘rates’’ of change against the baseline over time driven by culture, but the analyses performed so far have shown no evidence to support that notion This method could also be used with large international organizations or those with diverse product lines as a method to create an apples-toapples comparison of change (improvement or decline) across the organization Unemployment The second quarter 2009 administration of the employee confidence survey, with a bolstered sample of more than 10,000 respondents, enabled a state-by-state comparison within the United States Additionally, since U.S economic data are more regularly and readily available than that for many countries globally, we were able to compare unemployment before, during, and after the survey In short, employee confidence correlated significantly with unemployment, fractionally stronger with the survey measure as a leading indicator of subsequent quarter unemployment (−.42) than as a concurrent (−.36) or lagging (−.38) indicator Figure 9.2 shows the relationship of employee confidence in the second quarter of 2009 as related to unemployment in the third quarter Company Performance Aggregating employee opinions to a country or state level helps to illustrate that employee opinions have relevance and usefulness across cultural and governmental borders However, organizations are typically interested in driving their own financial results as Strategic Surveying in the Global Marketplace 239 Figure 9.2 Employee Confidence and U.S State Unemployment NE 1.55 SC VA MD WV GA AL MN WA 1.5 TX CT CO LA EC Score UT IA PA 1.45 KS OK NY KY MS AZ MA NJ MO WI NC CA RI FL IL TN OH NV IN 1.4 MI OR 1.35 4.8 6.8 8.8 10.8 Unemployment 12.8 14.8 Note: Only states with at least 50 employee survey respondents were included in the analyses opposed to macro-economic performance With a subsample of U.S.-based organizations, public financial records were matched to individuals’ survey results Findings included: • Companies with top-quartile employee confidence averaged −16.79%, three-year total rate of return (TRR), contrasted with companies having bottom quartile employee confidence at −37.66% Note that these distressed financial results were due to the study’s coinciding with the recession of 2008–2009 • Diluted Earnings per Share showed a change of +2.33 where individuals had top-quartile employee confidence, versus −5.74 for the corresponding bottom-quartile employee confidence group Additionally, employee confidence matched self-report measures of recent organizational performance Sixty-eight percent of those with high employee confidence reported that their company 240 Going Global Figure 9.3 Employee Confidence and Organizational Performance How has your organization’s performance changed during the past year? 80% 70% 60% 50% 40% 30% 20% 10% 0% Declined No change Improved Low ECI 53% 33% 14% High ECI 6% 27% 68% Note: Y-axis scores reflect percent favorable scores on employee confidence performance has improved over the last 12 months versus 53% of those with low employee confidence reporting that it has declined (see Figure 9.3) Thus, we can conclude that employee perceptions of performance align with the fiscal reality Consumer Confidence It could be logically argued that the source of consumer confidence comes from what is happening to the individual employee at work If workers are concerned about losing their jobs or have other reasons to doubt the health of the organization, they are likely to put off buying that new car, refrigerator, or home The perception of current financial well-being and people with low versus high levels of employee confidence was examined to see if differences would emerge in their anticipated consumer spending It is very clear that those with lower levels of employee confidence express more worry about their personal financial well-being and that this worry carries over to stated intentions Strategic Surveying in the Global Marketplace 241 Figure 9.4 Employee Confidence and Purchasing Confidence Currently worried about personal financial well-being to a great extent 70 60 50 40 30 20 10 Are delaying current purchases to a great extent 70 60 50 40 30 20 10 4Q08 1Q09 Low ECI 2Q09 4Q08 High ECI 1Q09 Low ECI 2Q09 High ECI Note: Values represent percentage favorable regarding consumer spending (see Figure 9.4) Additionally, Employee Confidence was also found to mirror the pattern seen on the monthly measure of consumer confidence published by the Conference Board (see Figure 9.5) Case Study Conclusions The lessons of this case study are as follows: • National differences in employee confidence clearly exist • Because of the significant relationship with changes in GDP (initial rank order coefficient of 87 and replication of 77), clearly a substantial proportion of country-by-country variance can be explained by economic factors, and not simply cultural factors • Employee confidence has worldwide meaning and predictive value • Within-country changes in employee opinions are more comparable than raw scores For example, comparing China’s raw score to other countries (it has the fourth highest) is much less valuable than comparing China’s change from June 2008 to June 2009 (it is the second largest improvement) 15 25 35 45 55 Ju A I A M Aug 101.5 Sep Oct Nov 90 98.7 Dec 2Q08 Jan Feb 3Q08 Mar 93.6 Apr 4Q08 May 98.9 Jun 1Q09 100.0 Jul F ECI % Ja 51.0 51.9 56.9 59.8 38.8 44.9 38.0 37.7 25.3 26.0 39.2 54.8 49.3 Conf Board % N Jun O Employee Confidence 2Q08 − 2Q09 92 94 96 98 100 102 65 104 75 Consumer Confidence Figure 9.5 Employee Confidence and U.S Consumer Confidence 2Q09 ... trust Another difference in the Arab world is the practice of giving and preserving honor The in? ??uence of the family is central to understanding the Arab manager’s use of time during the working day... the mother, continues into the classroom, and is broadened by their exposure to people and ideas During the entire time, the father is the guide who sets the direction In the ‘‘Patriarch Model’’... with the son what is happening The focus is on developing the way the son thinks and what he sees When the father is comfortable with the son’s thinking patterns and behaviors, he will begin to