Managing in Emerging Markets

By Michael Maccoby

Research Technology Management Vol. 54, No. 4 July-August 2011 pp. 53-55.

Over the past 20 years, I’ve worked in 11 of the 19 emerging markets Standard & Poor’s has identified in Asia, the Middle East, and Latin America (S&P 2010). During that time, a number of technology companies have evolved from international companies with command and control centralized in the developed world to global enterprises with at least some of their strategy and R&D functions located in emerging markets. In the 1990s, ABB, one of the first companies to practice the slogan of “think global, act local,” sent me to 10 countries in Asia, some on the S&P list, to report back on how local and expat managers viewed strategy, organization, management—and each other. I found that while national culture shaped different attitudes and behaviors among countries, common human side issues were essential for managers everywhere to understand. These issues include:

  • Evolving attitudes to work and employment,
  • Differing perceptions around leadership and motivation, and
  • The role of culture and identity in workplace relationships.

Evolving Attitudes to Work and Employment

Since my work in the 1990s, I have found that changing cultures in emerging markets are forming a new generation. Raised on the same interactive technology, movies, and videogames as their counterparts in developed countries, members of this new generation of technical professionals are much more like their developed-world peers than past generations seem to have been.

This change has been facilitated by fundamental changes in the culture of many of these countries, catalyzed by rising education levels along with corresponding increases in income and health, increasing numbers of engineers and technical professionals, and growing numbers of women entering the managerial and technical ranks. Just like technical professionals in advanced economies, emerging market professionals vary in what motivates them at work. In the leadership workshops I led, although there were some participants with bureaucratic attitudes, many of the younger professionals were more flexible and interactive, welcoming team structures that assigned responsibilities based on skills rather than seniority and receptive to managers who function as facilitators more than authorities.

This observation is consistent with what I found from questionnaires I recently gave to over 100 technical managers, many from emerging markets, at a global telecommunications company. While some managers’ responses showed them to be more comfortable with the kind of fl exibility and social interactivity embraced by younger workers, even those who scored lower on the scale (showing a tendency toward a more bureaucratic, hierarchical approach) said that their work was pushing them to be more open and interactive. All of the managers I spoke with recognized the pressures requiring them to become more interactive. While you can assume that the technical professionals you manage likely share interactive attitudes, you must also be sensitive to important cultural differences around concepts of leadership and identity. These different patterns of culture can create serious challenges for managers in emerging markets.

Leadership and Motivation

Culture can shape models of hierarchy and leadership, defi ning what it means to be a leader and what a leader’s role really is. Notions of leadership may differ even within groups that may seem, to Western eyes, to be more alike than different. In a study I conducted twenty years ago, Chinese managers in Taipei and Beijing expressed different descriptions of an ideal manager. The Taiwanese wanted a manager who would lead in the Confucian tradition. In return for his workers’ loyalty, the manager would be a teacher and protector. In Beijing, where Mao’s cultural revolution had attacked patriarchy and Confucian philosophy, the managerial model was more American. One Chinese engineer I interviewed compared his ideal manager to a winning basketball coach who places people in positions that fit their strengths. This ideal manager should be a flexible strategist able to change an approach that isn’t working.

Although Confucius doesn’t seem to figure in this ideal, there is a common thread in these ideas of leadership: a good coach is also a teacher. Berth Jönsson at TNS SIFO defines coaching as supporting employees at work by helping them learn and develop their skills. SIFO research, based on surveys and interviews with employees around the world, indicates that most managers in every country have a harder time developing these skills than what SIFO calls “structural skills” (for instance, making decisions or clarifying roles and goals) or “relationship skills” (communicating well or being friendly). SIFO finds having a manager with “coaching skills” is more highly correlated to employee motivation and commitment than having a manager who is only strong on structural and relationship skills.

SIFO conducts periodic surveys for global technology companies. In a recent survey, Chinese employees reported that they receive more coaching than employees in any of the other countries surveyed—more than employees in other emerging markets and more than employees in the United States, United Kingdom, and France (which scores the lowest of those countries surveyed). Taiwan comes in a close second.

The Chinese have built on a powerful tradition of mentoring leadership that goes back 2,500 years. It results in an exceptionally motivated and committed workforce. Western managers can and should learn from it.

Culture and Identity in the Workplace

Good relationships at work are essential to effectiveness and motivation, especially in technical organizations. When people respect and trust each other, they share information and communications are more credible. Distrust undermines collaboration. Within emerging market cultures, there are distinct subcultures of people with different religious or ethnic identities, and that ethnic or religious identity can determine both whom you trust and who trusts you. In Malaysia and Indonesia, for instance, the Chinese minority tends to stick together while the majority culture runs the government. In Malaysia, the majority group, the bumiputra, enjoys benefits denied ethnic Chinese. In the Middle East, religious differences provoke distrust and conflict. In India, both religious and caste identities shape relationships.

Working in global markets, managers also need to be aware of societal factors that affect business relationships. People are generally more open and trusting in societies where corrupt practices are punished and contracts are protected. One reason why Singapore has developed so rapidly is that offi cials are paid well and corruption is strictly punished. Where people cannot trust the government, they are more likely to stick with their religious or tribal identity group.

In emerging markets, expats from Europe and the United States often stay together rather than making an effort to socialize with local managers to develop trust. This can cause resentment, especially when local managers feel disrespected and unfairly compensated in comparison to expats. To develop productive collaboration, expat managers should make efforts to socialize with locals and explain the reasoning that determines their HR practices.

The Leadership Challenge in Emerging Markets

The primary leadership challenge for R&D managers in any country is to attract and retain the best talent and integrate a group of people with different values and emotional attitudes into an effective and effi cient team. Talented technical professionals in any culture want to feel they are understood, respected, and treated fairly. To build an effective team, you need to be sure that everyone shares the same purpose. Common purpose forges strong relationships. Members of the best teams in sports as well as industry share a common purpose and sense of identity. They believe they will succeed as individuals only if the team wins. As an R&D manager, it is your job to foster a common identity among people who may have different religious, ethnic, or cultural identities by communicating a meaningful purpose; enforcing the practical values that further that purpose, such as collaboration and quality work; and clarifying how you will measure results. You need to practice these values by being a mentor and a coach for the people you lead.

Expat managers should work at understanding the culture of the country where they are stationed. When people feel you are sincerely interested in understanding them without being judgmental, they usually respond by speaking openly. When I was asked by ABB to interview managers in Asian countries I had not visited before, I questioned whether the managers would speak openly to me. I offered to first test my ability to gain useful information in Taiwan and Thailand. Before visiting these countries, I read books on their culture and history; this proved extremely helpful in understanding the managers I interviewed. Many of these managers appreciated the opportunity to engage in a dialogue that allowed them to share their views and reflect on strategy, organization, management, and their own motivations at work.

This dialogue will be more meaningful if you understand your own cultural attitudes and values. There is a psychological tendency to think that our attitudes and values are human nature, and others who are different are somehow deviant or underdeveloped. But our attitudes and values are shaped by our experiences in our families and at school, work, and play within a particular culture. Although the new global culture is shaping a common interactive social character, the process is in its early stages, especially in emerging markets. It helps R&D managers to understand the different cultures and values of the people they are leading.

However, you should be cautious about interpreting survey results, even the ones cited here. Although national cultures influence organization and leadership, so do the types of companies and their modes of production. Those workplaces where roles are strictly formatted and employees follow a script or defined process are likely to be more hierarchical, and their leaders more autocratic, than those where project teams tackle complex problems or develop new products in a less-structured manner. Statistics regarding employee attitudes aggregated by individual country can be misleading if we don’t know the type of organization surveyed. We should be alert to what psychology terms “attribution error,” attributing behavior to personality or cultural factors instead of to structure or processes.

Finally, in many emerging markets, the gap between the new professional class and those people left behind is large and growing. When people can’t find jobs and blame autocratic leaders who are getting rich, many will be attracted to revolutionary movements, as in Egypt, with uncertain outcomes. This can cause uncertainty for global companies in some emerging markets. The better the relationships that are developed, the better informed expat managers will be of potential trouble, and the more support they will have from locals.


References

Standard & Poor’s (S&P). 2010. Equity Indices: S&P Global BMI. Fact Sheet. S%P Indices, December 31. http://www. standardandpoors.com/indices/sp-global-bmi/en/us/?indexId= spgbbmbmi-usdff–p-rgl (accessed April 28, 2011).



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