The Global HR Challenge

Managing collaborative teams across international borders

Global Teams and Information Flows

Cross-border teams for innovation are sprouting like weeds. Circa 1975, only 1 percent of the U.S.-based patents from large companies involved an overseas inventor, but this share exceeded 13 percent in 2018. Excluding patents that have only a single inventor, one out of five U.S.-based teams now includes an overseas member. This did not happen by chance. It is quite difficult to build overseas R&D capability, and early innovations produced by research outposts tend to be weaker than the company’s primary R&D centers. Collaborative global teams are stronger and close this performance gap. What challenges are these teams helping to solve?

It is hard to predict what will work in a new location, and cross-border teams support learning during market entry. They are a lifeline to the mother ship and even a safety valve should something go wrong. These teams further supplement local staff during early hiring and potentially in permanent ways, such as when architecture-level work is conducted in the U.S. while more-detailed developments occur abroad. Headquarters may also want to keep its best cards “closer to the vest” when entering environments where idea theft is a worry. These factors make cross-border teams more likely when a company enters an unfamiliar nation, where the traditional recipes may not work as well.

The high-profile life of Kai-Fu Lee shows key roles that global talent play. Born in Taiwan, Lee came to America via the education pathway, first for high school and continuing onward to a PhD in computer science from Carnegie Mellon. After sojourns in academia, start-ups, and large corporate labs, Lee joined Microsoft in1998 to launch the Beijing facility described earlier, moving back and forth between countries to build it up. In 2005, he was hired away by Google to launch their Chinese operations, and since 2009, Lee has run an investment company focusing on Chinese start-ups. Undoubtedly, his frequent-flier miles easily cover any travel for family vacations! Lee’s colorful story illustrates a general pattern: The hiring of global talent enables investments by their employer into the talent’s home countries. Skilled immigrants can strengthen a company’s internal capabilities to the point that it forgoes partnerships and uses, instead, wholly owned operations for overseas entry.

Cross-border teams also facilitate knowledge flow. A persistent problem for large organizations is separate pools of knowledge—not knowing what you already know—and millions of dollars have gone into knowledge management systems to bridge these gaps. Although not a panacea, cross-border teams transfer information better than exclusively foreign ones. While companies must weigh these benefits against the greater expense of collaborative teams, international expansion is placing an ever-greater premium on cohesion and common knowledge across far-flung units.

This phenomenon also affects start-ups. While entrepreneurs dream of building the next unicorn, they often can’t afford the price of computer programmers in the Valley or London. They contract, instead, with developers in cheaper places like India and Estonia for early coding work, in some cases even exchanging equity ownership to minimize cash outlays. This tactic creates a global team well before the first customer is signed. As ventures gain traction and start to scale, many then bring tech development back in house to enable greater coordination. This is quite remarkable, as it flips on its head the traditional globalization narrative, in which companies went abroad only after achieving success in their home markets. By contrast, this “globalization in reverse” path starts out international before retracting to a more localized presence.

“Globalization and the increasing importance of teams have combined to make cross-border teams almost commonplace”. The future will see even more of them, as enabling technologies like video conferencing, Dropbox, and Slack remove existing wrinkles.

Some companies are also adopting advanced technologies like Beam, a tele presence robot that allows a remote person to navigate around an office and talk to people face-to-face via a display screen. Advances in virtual reality will soon push this one step further, but technology can’t solve all of HR’s problems.

Headaches for HR Everywhere

Show some love for your HR director at the next company gathering, as his or her responsibilities are being supersized. Global companies must support and align leadership and skilled personnel across several countries. While GE and Haier employ many workers, frictions are most common among their high-skilled talent. A factory worker in Haier’s South Carolina plant is unlikely to interact much with his peer in China, but the new plant manager will.

Employment practices vary substantially across countries, and organizations must calibrate the level of consistency to impose for compensation, length of the work week, annual vacation time, and related policies. These issues exist for top managers, but leaders make one-off compromises and are less likely to follow a standard workweek anyway. Work arounds become harder for middle management, as legal differences and cultural expectations start to bind.

Sometimes, it is easy to be generous, as when Finnish game developer Supercell shocked U.S. employees by closing its Silicon Valley offices for July in accordance with Finland’s summer holidays. But deeper tensions exist when the global team is designed to take advantage of differences in wage rates. While the programmer hired in Pakistan may be thrilled about his new job, there is no guarantee he won’t become grumpy about being paid less than his colleagues in Paris and Hong Kong.

Questions also exist for consistency in company culture. New employees are less connected to what has come before, and integration takes time. Rapid global expansion creates difficult tensions, like selecting between a new country manager with great sales contacts and one who fits best with the company’s culture. Sometimes, leaders also need to let go of past traditions. I have worked with several European companies that now have most of their employees overseas. Their leadership debates which parts of being a “Danish company” or a “Swedish company” should be preserved and which should be let go.

Global employees who collaborate frequently on tasks like product development, customer service, and operations face additional difficulties. Groups of team members in multiple countries must guard against an “us versus them” mentality, which reduces trust and team effectiveness. Managers must strengthen trust across groups and avoid being perceived as playing favorites. One start-up emphasizes a “remote first” perspective, such that important actions are done only with the inclusion of remote team members. Others require that team members rotate frequently across sites.

Author : William Kerr is the D’Arbeloff Professor of Business Administration at Harvard Business School. Bill is the co-director of Harvard’s Managing the Future of Work initiative and the faculty chair of the Launching New Ventures program for executive education. Bill is a recipient of the Ewing Marion Kauffman Foundation’s Prize Medal for Distinguished Research in Entrepreneurship and Harvard’s Distinction in Teaching award. Kerr recently published The Gift of Global Talent: How Migration Shapes Business, Economy & Society, that explores the global race for talent and how countries and businesses compete for high-skilled migrants. The book reveals how immigration has transformed U.S. innovation, reshaped the economy through the rise of talent clusters and superstar firms, and influenced society at large in positive and adverse ways.
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