New Insights on Global Leadership Development

Point of View

Patricia Milligan, President of Mercer’s Human Capital Business

It’s time leadership caught up with global growth strategies

Due to corporate growth pressures, companies are implementing globalization strategies of an unprecedented scale and intensity – with no end in sight. Yet few organizations are well prepared for the talent demands that are required to successfully lead the business objectives that lie behind these strategies.

In this new body of research, we have found that companies often lack frameworks for identifying global leadership talent, have inadequate talent management practices and have hit-or-miss approaches to development. Our goal is to address these critical gaps by drawing from an extensive body of research, in-depth company interviews and our own fi rst-hand experience.

In the report, we lay out a global leadership capability framework and then discuss how it could be used. We also examine the types of experiences that are most helpful to developing global leaders and describe the common organizational barriers to development.

Mercer is pleased to have collaborated with Dr. Jay Conger to gain these critical insights into the development of global leaders and to share the practical steps that you can take to ensure that your company’s global leaders keep pace with the rapid progress of today’s global business.

For more information about Mercer’s leadership consulting services, visit www.mercer.com/leadership or contact your local Mercer offi ce.

Regards,

Patricia Milligan

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to globally integrated organizations. Revenues from international markets now often exceed those of the home markets.

Yet, we risk over-stretching ourselves, as our approaches to building pools of global leadership talent are too weak to support this expansion. Important competitive advantages will ultimately go to the handful of organizations that are investing heavily in the processes that effectively groom global leadership talent. The irony of this critical shortfall in talent is that we know a great deal about the requirements for building cadres of global leaders; yet, in corporations today, little of this knowledge is being applied in a disciplined manner. In our research, we were surprised to discover how many companies are poorly prepared.

organization or at the very top – although the ultimate destination for global leaders is general management over a region of the world or, indeed, the entire globe. A leader may have global responsibility over a business or functional activity or multibusiness lines. The factor that differentiates these leaders from others in your corporation is that their roles take them across national and cultural borders.

Many corporations today have a severe shortage of global leadership talent. Few corporations possess the sophisticated processes that can groom managers to lead effectively across countries and cultures. Many organizations lack a culture of mobility that encourages high-potential talent to work outside their home countries and far away from corporate centers. An even greater number have failed to build rigorous and standardized performance management systems to assess and deploy their leadership talent across the globe. Without such systems, the development of talent for global leadership roles is, at best, a hit-or-miss proposition.

At the same time, many companies are globalizing their markets as never before, moving from multinational operations

At its simplest, the term “global leader” applies to anyone in your organization who has to work across geographic and cultural boundaries. This could range from 1% to 4% of your overall management talent. If a signifi cant portion of a leader’s role demands working with other cultures, he or she could be based in the corporation’s home country and still qualify as a global leader. Such leaders can be found at the front line of your

New Insights on Global Leadership Development

What do we mean by ‘global leaders’?

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“calling out” of the distinctive capabilities required for global leadership roles. Yet, our interviews with companies revealed that few of them possessed a distinct competency framework for their global leadership talent. Indeed, many used their general leadership model for their entire population of leaders – some added a few “global” dimensions to the general model while others adopted models taken from academic literature, but without signifi cant customization. In our view, these choices are serious mistakes that refl ect limited sophistication in the fi eld and the failure to recognize the unique demands facing global leadership talent.

However, a handful of organizations did possess distinctive global leadership models. These fi rms had the most sophisticated approaches to global leadership development and took the challenge more seriously – but these organizations are rare. As we examined their different models, we also found that each had shortcomings. We therefore we went back into the research literature and into our interviews with companies in order to craft a better global leadership capability model. Described below, this framework represents the best of our current understanding of the capabilities required in global leadership talent.

extremely helpful, there is no universal personality that characterizes the global leader – people with any of a wide variety of personalities can perform well in such roles. Indeed, certain cultures place premiums on particular personality

Successful global leaders are a unique breed, distinct from many of your organization’s line leaders. In order to succeed in their roles, they must cultivate a wider variety of competencies, skills and abilities than their domestic counterparts – knowledge and expertise cultivated in one international assignment do not necessarily transfer to the next one. Global leaders have to perpetually engage in the process of making sense of new and ambiguous situations, as well as learn to deal with unexpected challenges. This requires an openness to new ideas, behaviors and ways of thinking and the ability to make the necessary mental and behavioral adjustments to suit each national context.

In contrast to line managers who stay within the confi nes of their home country, global leaders face deep personal challenges, including those of identity. One group of researchers has shown that new cultures force us to question basic assumptions about who we are. A global leadership assignment can literally transform the manner in which we see ourselves. This powerful experience is often described as “culture shock.”

We strongly believe that the process of developing such special talent requires the

Having defi ned who your global leaders are, it is necessary to examine the capabilities that can help them succeed. We begin with a caveat about the contribution of personality. While certain personality attributes can be

Why you need to proactively groom a cadre of global leaders

The anatomy of a global leader: The core capabilities

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1 McCall, M. W. and Hollenbeck, G. P. Developing Global Executives, Boston: Harvard Business School Press, 2002.

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are not only fast learners but are also entrepreneurs who can skillfully adapt their styles and mindsets to new worlds. They capture the drive and responsiveness needed to lead successfully across multiple cultures, nations and boundaries.

However, motivation and learning capacity are not enough.

The second set of competencies, the global leadership skills and knowledge capabilities (see below), emphasizes the importance of skills and knowledge, including the skills required to lead multicultural teams and to successfully network in a new culture. The knowledge capabilities include cultural literacy and value-added expertise unique to the demands of your organization’s culture, strategy or best practices. With these capabilities, global leaders are able to build effective working relationships and socialize corporate goals and norms in distant operations.

The third cluster recognizes the mindset requirements for global leadership roles. It addresses the strategic decision-making side of leadership. A global mindset (see below) is necessary to assess the complex and often nuanced information that is presented to decision-makers in global environments. This cognitive capability includes the ability to be comfortable with cultural complexity and its contradictions,

attributes: in one culture, humility may be highly valued while in another the desired attribute might be self-confi dence. The capabilities we will describe can be categorized into three separate but complementary clusters. While many of these capabilities are required of both global and local leaders, their demand is intensifi ed in global roles. Each cluster consists of several capabilities that every current or aspiring leader must possess in order to lead effectively in a global environment.

There are the baseline competencies that recognize the leader’s natural receptivity to cross-cultural experiences. Certain individuals are energized by experiences outside their home culture – they enjoy spending time in new cultures and they are inclined to experiment with their behavior to successfully adapt to the demands of a new culture. These baseline competencies recognize that unique attributes will motivate individuals to seek out global assignments and learn from them. Known as the global baseline leadership capabilities (see below), these are the foundation requirements for a career in global assignments and include the leader’s catalytic learning capability, sense of adventure, entrepreneurial spirit and sensitivity and responsiveness to cultural differences. These capabilities refl ect the need for global leaders who

Catalytic learning capacity Ability to lead multicultural teams

Comfort with cultural complexity and its contradictions

Sophisticated networking competence

Opportunity sensing for the uncertainty of global markets

Cultural literacy

Context-specifi c leadership capabilities

Systems thinking in global contexts

Extended time perspective

Sense of adventure

Entrepreneurial spirit

Sensitivity and responsiveness to cultural differences

Global BaselineGlobal Skills and

Knowledge Global Mindset

Global Leadership Capabilities

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the ability to perceive opportunities in the uncertainty associated with global markets, the capacity to think systemically and an extended time perspective. This mindset cluster helps global leaders to

Certain core capabilities are critical contributors to the success or failure of global leaders. Such factors constitute the founding platform for global leaders to effectively lead a team of talented individuals who may or may not share their cultural background. Moreover, the highly novel environments in which global leaders typically operate offer unexpected challenges that require them to stretch their knowledge bases and skill sets. This means that global leaders cannot succeed in a global environment characterized by foreign cultures and unfamiliar mindsets without a catalytic learning capability.

A catalytic learning capability is defi ned as the ability to scan for new ideas, assimilate those ideas in ways that make sense out of novel environments, and translate and implement this new learning into productive action for organizational stakeholders. A unique advantage of a well-developed catalytic learning capability is that it deters a sense of complacency that often accompanies initial successes. It also encourages the global leader to constantly scan for ideas and information to ensure more informed and appropriate decisions as circumstances shift.

Another critical constituent of the global baseline capabilities is an enduring sense of adventure. Given that global leaders are required to leave their familiar home-country environments and assume leadership roles in unfamiliar locations, it is critical to possess a healthy sense of adventure. If leaders lack this sense of adventure, they may not be able to maintain a sustained focus on assimilating and responding to the new stimuli that they encounter while

reconcile the broader picture perspective of country markets, economics and politics with the day-to-day tactical decisions.

functioning in a new culture. A healthy sense of adventure allows global leaders to take calculated risks and venture into unfamiliar territories. The willingness to step outside their comfort zone and explore the novelties and nuances associated with leading in a foreign culture is a foundational strength that allows global leaders to be effective. One unique advantage of having such a sense of adventure is that it accelerates the catalytic learning process discussed earlier and strengthens the relationship with subordinates. For example, when subordinates and peers of global leaders notice their leader’s willingness to explore the various aspects of their own culture, they will be more inclined to welcome such leaders into their circle of trust. In the ideal world, given the extreme stress often associated with relocations to foreign lands, the families or partners of global leaders should share in this orientation toward adventure.

The third cluster of the global baseline capabilities is the existence of an entrepreneurial spirit. An entrepreneurial spirit embodies several positive leadership traits, such as the ability to perceive opportunity, the capacity to articulate a compelling vision, an ability to take calculated risks, creativity, self-effi cacy and resilience in the face of adversity. We know from research on successful global leaders that such individuals exhibit high levels of self-effi cacy, resilience and emotional stability. For example, high levels of self-effi cacy (that is, a strong belief in one’s abilities to achieve desired goals) are the rudimentary building blocks of leadership in foreign environments. Leaders with high self-effi cacy possess

The global baseline capabilities

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the psychological stamina to take on the leadership challenges of unfamiliar environments. Through their actions (for example, communicating a clear vision, outlining a specifi c plan of action, etc.), self-effi cacious leaders convey to their subordinates their sense of confi dence in achieving organizational goals. The latter, in turn, reciprocate by extending high levels of commitment to their leader. Additionally, given that global leaders lead in environments with which they are relatively unfamiliar, they often experience setbacks and adversities. In such situations, resilience, along with an emotionally stable mindset, become critical factors for bouncing back from adversity. Resilient leaders also rely on their catalytic learning capabilities to rectify their mistakes and setbacks and resume their initiatives with renewed vigor.

The fourth and fi nal component of global baseline capabilities is cultural adaptability. This refers to an intrinsic interest in identifying cultural differences and contrasting mindsets and an authentic willingness to adapt to them. Here, the word authentic is important because a feigned attempt at cultural adaptation will be perceived as insincere. In their open-minded demeanor and day-to-day actions, successful global leaders convey to their subordinates that they understand, approve and embody the values and practices of the native culture. One unique advantage associated with these practices is that subordinates of such global leaders are more willing to identify with their leaders, which ultimately results in high levels of trust and followership.

In addition to the baseline capabilities discussed above, it is important that global leaders possess the skills and knowledge capabilities to effectively lead in cross-cultural contexts. Most essential is the ability to motivate and lead multicultural teams. Motivating subordinates can often be a challenging task but, when it comes to motivating and leading subordinates from a different culture, leaders often come to the rather unpleasant realization that the techniques and strategies that were successful in their home culture may not succeed in a foreign culture. It is imperative that global leaders be willing to let go of their learned behaviors and re-learn new approaches. This allows them to lead new subordinates who are culturally different, possess differing mindsets and are part of a context that differs substantially from the one to which leaders were previously accustomed. The ability to motivate and lead multicultural teams depends heavily on the dimensions of catalytic learning capacity, resilience, emotional stability and cultural adaptability that we discussed earlier. In essence, global skills

and knowledge capabilities build upon the global baseline capabilities.

Another critical skill that contributes to the success of a global leader is the ability to be a proactive and sophisticated networker in a new cultural environment. The importance of networking ability to leadership success is no longer a moot point – research has underscored the relationship between active networking and leadership effectiveness. Global leaders have to depend upon their networks to accomplish organizational objectives. However, a key distinction between generic leadership contexts and global leadership contexts is that global leaders leading in new environments often have to start building their network from scratch. In addition, some cultures are more closed to outsiders, with only a savvy networker able to gain access. This makes the ability to be a sophisticated networker more critical for global leaders.

The leaders’ challenge of building a comprehensive and diverse network is compounded by the fact that they

Global skills and knowledge capabilities

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operate in cultures that may have contrasting values, practices and languages. Thus, in order to succeed in forming a comprehensive network, global leaders have to work harder than leaders who lead in their native country, which further underscores the importance of the global baseline competencies.

Cultural literacy is the third constituent of global skills and knowledge capabilities. Cultural literacy refers to the ability to understand and leverage cultural differences. It involves a familiarity with different aspects of a culture – these can include (but are not limited to) language, social customs and practices, prevalent stereotypes and biases and value systems. It is a very critical capability that every global leader must strive to cultivate in order to be successful in a cross-cultural context. Culturally literate global leaders are more successful in communicating, convincing and persuading than those who are culturally illiterate. One unique advantage enjoyed by culturally literate global leaders is that they are able to communicate a sense of solidarity with their subordinates and peers, which often enables their subordinates to better identify with them.

As discussed previously, such high levels of identifi cation have several positive organizational outcomes, including, among others, greater leader-subordinate trust and commitment.

The fourth and fi nal component of global skills and knowledge capabilities is context-specifi c capabilities. These are capabilities that are required by the unique demands of your organization’s strategy and culture, or your industry, or the nation within which the leader operates. This component recognizes the fact that any universal global leadership model has limitations. In other words, it is critical that you have a degree of customization. This view is supported by a multiyear research project on global executives in 50 multinational corporations. From this study, researchers concluded that two-thirds of the capabilities of effective global leaders were universal, in all companies and positions. One-third of the attributes, however, were unique to the company, function, industry or nation. So this dimension recognizes the need for customization with your global leadership model. Several unique capabilities can and should be included.

The fi nal set of capabilities involves a global mindset. This mindset is openness to and an awareness of the complexities of different countries and their cultures, economies, politics and marketplaces. Leaders with a sophisticated global mindset are able to read and adapt their approaches to both pronounced and nuanced dimensions of the nations in which they operate. Several key factors contribute toward the formation of a global mindset. The fi rst constituent is an innate comfort with cultural complexity and its contradictions with one’s home culture. If global leaders are not comfortable, they will end up communicating their sense of unease to their subordinates, who may respond

negatively to such inconsistencies and incompatibilities. They are also likely to appear inauthentic. Thus, it is very important that global leaders are able to successfully communicate their comfort with cultural complexities to their subordinates in a very transparent manner.

Yet another important aspect of a global mindset is the ability to see opportunity in the uncertainty or newness associated with global markets. This is a key attribute that every successful global leader must possess. Leadership on a global level frequently involves interactions with and between customers and stakeholders that are located in different cultures, economies, governments and so on.

Global mindset

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2 Black J. S., Morrison, A.J. and Gregersen, H.B. Global Explorers: The Next Generation of Leaders, New York: Routledge, 1999.

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Global leaders are often at the mercy of the unprecedented uncertainty that corresponds with our perpetually changing global environment. Thus, making sense of and thriving amid such massive uncertainty, and being able to decipher opportunities ahead of the competition, are critical elements for success as a leader. Such capacities often accrue as a result of multiple international assignments. Additionally, this capability is an extension of catalytic learning capability, in the sense that constantly scanning for new ideas and learning from past and present experiences help successful global leaders make sense out of the ambiguity and uncertainty that abounds in global markets.

The third component of a global mindset is systems thinking. Systems thinking refers to the ability to understand and make sense of the interplay between people, structures and processes that are internal as well as external to an organization. It involves viewing their organization as merely one dimension in a grander scheme that includes competing organizations, internal as well as external stakeholders and customers within a larger environmental context. The ability to think on such a grand scale provides successful global leaders with the insight to avoid making decisions that are narrow in their scope and purport. Systems thinking is probably the most critical competency for executive-level global leaders who have to operate within and across multiple cultures, because their decisions can have profound consequences for entire organizations.

The fi nal component of a global mindset is the presence of an extended time perspective. Operating outside of their home country, global leaders often fi nd that relationship building as well as decision making takes far longer than expected. So there is a pronounced need for global leaders to take a longer range perspective than would be the case in their home countries. An extended time perspective also allows global leaders to think ahead and plan for possible deviations from the norm,

as well as contingencies that may have an undesirable effect on bottom-line organizational outcomes. With an extended time perspective, global leaders are able to formulate concrete, long-term visions for their organizations rather than simply focus on immediate short-term gains. They can tolerate the long process of gaining approval from government offi cials and building trusting relationships with customers and colleagues. This is important, because leading in other cultures can be relatively more time consuming due to the need to forge strong alliances with new stakeholders and customers. The pace of decision making in some countries can be painstakingly slow, and the global leader’s perspective on time can encourage them to persist rather than give up. Thus, an extended time perspective allows global leaders to think ahead, plan ahead and anticipate problems before they actually surface. Such forward planning leads to a proactive type of strategic global leadership and contributes heavily to an organization’s long-term success.

As a fi nal refl ection on the model we have just proposed, we would add that one study suggests that a few of our leadership capabilities may have greater or lesser relevance depending on the country to which the global leader is assigned. For example, certain Middle Eastern cultures score relatively low on what is called “future orientation.” When using our capability model to train global leaders to lead in these cultures, it may be necessary to place less weight on the “extended time perspective” component. Similarly, certain Latin American cultures score relatively low on “performance orientation.” Thus, leaders who are planning to lead their organization’s units in these countries may wish to demonstrate their catalytic learning capacity more subtly. Focusing too much attention on performance-based learning may initially alienate their local managers. In both examples, the global leader may have to fi rst gain credibility and commitment and then demonstrate the capability.

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3 Javidan, M., Dorfman, P.W., Sully de Luque, M. and House, R. J. House (2006) “In the Eye of the Beholder,” Academy of Management Perspectives, (February, 2006), pp. 67–90.

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Should you expect these global leadership capabilities to vary by level? The simple answer is: yes. The model we have just described may be regarded as the ideal profi le of an executive level global leader. Such an individual would be responsible for a global business activity or function or would have signifi cant multicountry responsibility. Such global leaders would possess this complement of capabilities in signifi cant depth. In sharp contrast, we would expect to see only a few of these capabilities in a front-line manager – primarily the baseline ones. One possible exception might be organizations whose hierarchies are fl at – in which case, even younger global leaders may need to possess more of the capabilities.Using the “leadership pipeline” framework developed by Ram Charan, Stephen Drotter and James Noel, we will note how the capabilities vary by level. More important, we will highlight which capabilities need to be either assessed or developed at each stage.

There are fi ve important leadership passages before the CEO role in the leadership pipeline model. The fi rst passage is from managing self to managing others – in other words, the transition to a front-line manager. This is the stage at which we would expect to see certain individuals demonstrate the baseline global leadership capabilities of a catalytic learning capacity, a sense of adventure and an entrepreneurial spirit. These are foundational to the potential to become an effective global leader. Without them, a manager is not likely to seek out international assignments, nor likely to possess the resilience and adaptability required to succeed in such assignments. Selecting individuals possessing these attributes is the fi rst step in the global leadership development process.

After identifying individuals with these capabilities, a long-term grooming process should be initiated, preferably with an

assignment to develop the fourth baseline capability – sensitivity and responsiveness to cultural differences. Specifi cally, we recommend assigning junior global leadership talent responsibility for global team projects or, at a minimum, membership in them. Short assignments requiring travel to international sites are also suitable. It is very important at this stage to introduce cross-cultural training, along with the assignment of an in-company mentor who has successfully led global teams at junior levels. Providing “360” feedback from team members on the individual’s leadership skills and their cross-cultural sensitivity is extremely helpful soon after the completion of one or two global projects. We would expect that at the end of this passage the capability of sensitivity and responsiveness to cultural differences would be ingrained, or certainly tested. Later in this stage, an overseas assignment would be feasible, provided the individual has received positive feedback around cultural sensitivity, performance and leadership.

The second pipeline passage is from managing others to managing managers. Managing managers is a more crucial task and requires the ability to identify subordinates who have the potential to be good leaders. This is the stage at which our global skills and knowledge capabilities are cultivated. In an ideal situation, the potential global leader will have his or her fi rst signifi cant international assignment, with a duration of two to three years. Ideally, the assignment would be in a country with strong upside potential for market growth, but also one with a very distinct culture from the individual’s home country. The individual would be supported with cultural training before the assignment, followed by mentoring on the job. This period of immersion in a distinct culture will help him or her to develop a deep appreciation for the importance of cultural literacy. In addition to individuals’ local responsibilities, they

A stage-based approach to global leadership capabilities

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4 Charan, R., Drotter, S., and Noel, J.. The Leadership Pipeline: How to Build the Leadership Powered Company, San Francisco: Jossey-Bass Publishers, 2000.

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could be assigned one to two global projects – further refi ning their capability to lead global teams. In this passage, the networking competence now comes to the forefront. Working with an in-country mentor and colleagues, the individual spends a considerable amount of time learning about critical relationships outside the organization. With a senior in-country leader, the individual is taken on visits to meet prominent government offi cials, customers, suppliers and other external stakeholders. He or she is then given assignments that are dependent upon networking skills for a portion of their successful implementation. Their global skills and knowledge capabilities are assessed on a continual basis.

The third and fourth pipeline passages are from leading managers to functional managers and then to leading business managers. This requires a focus on the functions of the business followed by a broader focus on company operations and strategies. The individual now needs to take on a more holistic approach and strategic mindset. This is required for creating functional strategies for the company and managing the whole function of the business. While the individual’s global skills and knowledge are expanding, our global mindset capabilities are the main focus. By the end of this passage, the global leader should have completed international assignments in at least two if not three countries. The contrast between countries teaches the signifi cance of cultural and market differences and ingrains the importance of versatility and adaptability in leading. The leader’s assignments ideally will have also been in organizations and markets

in different stages of maturity. This type of variety develops the opportunity for sensing capability and the extended time perspective. In their leadership roles, individuals will have been required to implement initiatives that require working extensively with local and national governments. These reinforce the necessity of an extended time perspective, comfort with cultural complexity and sophisticated networking. After some time in this stage, each leader’s global mindset capabilities should be formally assessed.

The fi fth passage is from leading business managers to business group managers. Here the focus is on a group of businesses, not just one. Individuals at this level are required to become more profi cient at evaluating strategies, developing and coaching business managers, creating a portfolio strategy and correctly assessing the right core capabilities to succeed. By this stage, the global leader should possess the full complement of global leadership capabilities – although the global mindset capabilities are of paramount importance, given the strategic demands of the job and the complexity of multiple markets and businesses. At this point selection is the critical intervention, as the developmental groundwork for the global mindset capabilities needs to have been laid in the prior passages. Mentoring by executives who have held similar roles can be extremely helpful and the developmental experience should be complemented by executive education focused on global trends in markets, demographics, economics and political issues.

We have highlighted several of the ways in which global leaders are developed. From the research on effective global

leaders, we know that a number of practices have been identifi ed for the development of capabilities, including

How do global leaders really develop?

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expatriate assignments, multicultural teaming, rotational assignments and special projects, frequent business travel, training, coaching, mentoring, language immersion, leadership forums and assessments. Of these, expatriate assignments with appropriate support are the most effective. They are also the most costly for the organization and ultimately require the greatest logistics in terms of development support and tracking.

Expatriate assignments are considered the fast-track path to global leadership development. The sheer amount of resourcefulness required to succeed, along with the profound ways in which culture shock can transform an individual, make this the most powerful developmental experience. Expats also learn the organization’s operational capabilities on a global basis and, over time, develop trusting relationships with local offi ces. It is important, however, that these assignments be supported with adequate training, feedback and coaching.

Multicultural teams also provide opportunities to learn about critical differences in national, functional and corporate cultures. Since most operate virtually, they are hampered by the lack of physical proximity – an issue faced daily by executives leading global business units or heading global functional lines. These experiences are rich training grounds for

cultural sensitivities as well as the logistical challenges of virtual relationships.

Frequent international business travel can provide opportunities to work with various international offi ce locations and cultures. They can be useful for building a global point of view, networking and learning about cultural differences in communications and style. The downside of these experiences is that they are usually too short in duration to allow for genuine relationship building or for building a deep understanding of the local business. It is also worth noting that business travel can be arranged in ways that insulate the leader from the realities of working in a country on a more permanent basis.

Intercultural training programs are best deployed in the early stages of a global leader’s career or as preparation specifi c to a country assignment. Ideally, these programs should address important cultural differences and ways of doing business and building work relationships. These educational experiences are too short in duration to have the impact of proper work assignments. Mentors, on the other hand, can prepare global leaders for the cultural challenges they are about to face, as well as introduce them to critical stakeholders. They can also inform newly appointed leaders of the organizational and marketplace issues that need to receive priority attention.

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Mastering global talent mobility

There are many reasons few companies have succeeded at developing a deep bench of global leadership talent. In our research, we found a surprising number of companies with a laissez-faire approach to leadership development. Senior executives felt that their leadership talent could go anywhere in the world without the need for formal development experiences beyond cross-cultural sensitivity training. It was assumed that the “best” talent would quickly learn and perform effectively. Often, the executive team itself lacks international experience, and therefore has little appreciation for its value.

In many of the fi rms we interviewed, little value or reward is placed on global mobility. For example, for an individual to succeed over his or her management career, there may be no requirements for international assignments. In some cases, line managers sincerely believed that they would be penalized for taking international assignments – they saw colleagues who moved overseas lose critical visibility and infl uence with

decision makers at the corporate center. These colleagues were bypassed for promotions; it was therefore seen as too risky, in terms of career advancement, to take on an international assignment. The other side of the mobility equation is that hoarding of talent by senior managers, who will not offer them up for international assignments for fear of losing them, or because they see little development value in such experiences. Being a global leader involves expatriation, and that can be an impeding factor for leaders who have deep familial and cultural roots in their home country. Much of the research literature highlights the extreme emotional demands placed on the global leader’s family. Therefore, even though many leaders have the potential to be good global leaders, the number of leaders who are willing to take up the challenges and responsibilities of being a global leader is relatively low.

From the organization’s standpoint, deploying expats is costly. It is usually far more cost effective to promote local

The critical barriers to developing global leadership talent

Next-generation program and practices

Traditional, one-size-fi ts-all mobility practices were once the norm. Multinationals moving assignees across borders relied on transactional mobility policies, which were focused on assignment duration and costs and were managed by specialist islands within HR.

“Next-gen mobility” will be more strategic, with clients focusing cross-border talent mobility on business needs, particularly in key growth markets, and planning assignments to deliver measurable value to both the business and the individual. Leading companies have improved their internal customers’ experience through more effi cient and effective global mobility processes. Most important, global mobility is being integrated with other talent processes

so that it supports and enables the overall talent strategy.

In “next-gen mobility” we see global talent mobility driving improved outcomes in both business and talent management. Talent mobility facilitates business growth by moving key talent where it is needed. It also enables global leadership development through coordination of carefully planned international assignments. A mobility strategy that includes talent segmentation by purpose and value can align talent investments with expected returns – that is, targeting positive ROI outcomes for both the business and for assignees.

It is Mercer’s perspective that organizations can manage people and maximize talent with the same rigor as other tangible as-sets by:

Thinking like investors and ensuring that investments in a talent portfolio generate the desired return.

Developing, optimizing and operating creative and cost-effective talent mobility programs to strengthen the business and its talent.

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talent into leadership roles in many of the company’s global operations. It is therefore critical to assess what in-country leadership roles will be reserved solely as developmental assignments for global leadership talent and what roles will be for local talent. In the case of the latter, these can vary substantially from country to country depending on the availability of local managerial talent.

Finally, even though the importance of global leaders may be touted by organizations, we found that companies failed to integrate the concept into their organizational talent management systems. A number of fi rms do not even have a set of global leadership competencies. Other organizations might have a set of global competencies, but they are strikingly similar to their home-

country leadership competencies, and so fail to make any real distinction. More signifi cantly, few fi rms have performance management systems that are effectively integrated with the global leadership competencies. For example, a manager may not be held accountable for demonstrating the capabilities in performance and promotion assessments. Many fi rms lack rigorous assessment processes to identify and track their global leadership talent below the executive ranks. While there may be a desire to develop global talent through job assignments, the systems to identify and deploy candidates are weak or fl awed. Repatriation can be a serious problem if the organization does not have a disciplined approach supported by an effective system of monitoring time abroad.

Assessing global leadership potential within an organization can be a challenging task. It is very easy to mistake native leadership potential for global leadership potential. As a result, organizations can make the costly mistake of selecting locally effective leaders for global leadership positions – without appropriately assessing their ability to lead in global contexts. Conversely, employees who may be less effective leaders in a local context may possess the capabilities and skills to lead successfully in global environments. Yet they may not make the cut.

Another assessment challenge involves potentially limited knowledge on the part of assessors about what constitutes effective global leadership. If the individuals responsible for assessments have a limited understanding of what it takes to be a successful global leader, they can make costly mistakes in selection and placement.

Finally, variations in standards and practices across a company’s geographic operations make assessment for global roles more complicated than for domestic roles. Since candidates are likely to be sourced globally, the challenge is that common candidate assessment standards are not likely to exist. Operating units in countries will have their own different mechanisms for assessing, developing and promoting their leaders – a candidate may be perceived as high-potential global talent in one country but not in another. Few companies have created universal standards by which they can assess their global leadership talent. This makes accurate assessments extremely diffi cult. Not surprisingly, McCall and Hollenbeck, in their research on global executives, concluded that rigid assessment and selection systems were likely to prove ineffective. They argued that such systems might end up screening out half of the desired candidates for global executive roles.

Determining global leadership potential

55 McCall, M. and Hollenbeck, G.P.The Lessons of International Experience: Developing Global Leaders, p. 52.

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The fi rst stage is to develop a persuasive case that explains why your organization needs to focus on a global talent pool. Start with your projected growth rates for global markets and global supply chains. Highlight critical gaps in the leadership talent for your company’s emerging and critical markets. Describe the unique

demands of overseas assignments and why tailored approaches are required to prepare global talent. Use case examples of general managers and executives who have performed poorly because of fl awed selection criteria or a lack of developmental support. Identify critical leadership roles that are pivotal to your

How to get started at building your global leadership pool

6 McCall, M.W. and Hollenback, G. P. The Lessons of International Experience: Developing Global Leaders, p. 103.

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We share the belief that relying on formal assessments as the primary tool for identifying global leadership talent is a mistake. Nevertheless, we do have general recommendations for identifying candidate potential, although these need to be complemented by other practices that we will discuss shortly. In addition, it is important that your assessment tools be grounded in solid research and be conducted by individuals with prior experience of developing leadership talent through international assignments.

The fi rst step toward determining an individual’s global leadership potential is to assess his or her motivation to lead in cross-cultural contexts. Research has shown that this motivation is one of the most critical precursors to successful leadership performance. Effectively measuring motivation to lead cross-culturally can help separate potentially effective global leaders from the rest. While measuring motivation, it is important to use a 360-degree approach. Data on an incumbent’s motivation to lead cross-culturally should be collected from multiple sources such as supervisors, peers and subordinates. Such triangulation ensures greater reliability of data. In addition, interviews with candidates should assess the depth of their interest in other cultures, their versatility in adapting to new environments and their desire for international assignments. It is also critical to identify how well candidates are able to create feedback-rich environments for their own learning, as well as their general sense of adventure. Extensive

personal travel, college foreign exchange experiences and knowledge of a foreign language can serve as markers of an individual’s motivation to work in cross-cultural environments.

Next, the previously discussed global leadership competency model can be used as a foundational framework for assessing global leadership potential in organizations. For example, catalytic learning capability, entrepreneurial spirit, cultural literacy, extended time perspective and other factors can be assessed using empirically validated measurement instruments. Like the motivation to lead cross-culturally, it is critical that the measurement of capabilities from the global leadership competency model spans multiple sources (for example, supervisors, peers and subordinates). Such multisource data collection would help ensure reliability. When conducted rigorously, interviews with candidates can detect these qualities.

Finally, appropriate weight should be given to the various capabilities while making selection decisions for different leadership positions. For example, if the leadership position involves leading a group of businesses, the global mindset capability should receive more weight in the determination of potential. On the other hand, if the leadership position requires extensive work with peers and important external stakeholders, then sophisticated networking competency may warrant greater weight.

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organization’s global strategic goals. Make global leadership development a top talent priority for HR and for your CEO.

Recognize that you need a distinct global leadership capability framework. Global leadership talent has unique requirements in capabilities. Construct a framework that recognizes the baseline requirements for leading globally, as well as the unique demands of your organization, its culture and industry. This is a low-cost fi rst step.

Institute mandatory cross-cultural training before individuals begin their international assignments. Tailor the learning experience to the unique cultural aspects of the country to which the manager will be assigned. Start a simple mentoring program globally, where seasoned local managers serve as in-country mentors to ease expats into their new role. In addition, it is important to identify a pool of seasoned global leaders who can serve as resources to mentor up-and-coming leaders. The latter can be deployed not only for formal mentoring but also as resources in executive education programs.

Set up career and development plans so that managers can express an interest in overseas assignments and apply for them. Design your job posting systems at the associate director level and above so that they are global and open to the organization. Select those who volunteer for assignments rather than those who do not. We know from research that volunteers tend to be more adaptive and therefore more successful in global assignments.

Start a high potential global talent pool. Cascade it down to the associate director level with pools at each level. Track assignments, on-the-job performance and developmental assignments within each pool. Start out with small pools to be certain your high potentials receive the attention and assignments they need.

Think about the full complement of assignments for development, from multiyear overseas assignments to short

term in-country projects to global team projects. Remember that the former are the most powerful developmentally, but that there are “right windows” for these assignments. Younger managers have fewer personal life restrictions, so they tend to be more “available” for these jobs. Target this population for rewarding early career expat jobs. Track their assignments in your talent management systems. Select high-potential global leaders to head up global project teams. Provide them with training and mentors in their initial assignments to these teams. You can also use action-learning programs to expose high potential global managers to emerging or critical markets. For example, teams can be assigned short-term learning projects to ascertain market opportunities for new products or services within a country.

Promote two-way mobility in your organization. In other words, build in attractive rewards for accepting overseas assignments. Make such assignments a requirement for entry into general management and executive roles with global content. Make it mandatory to have at least one or, preferably, two international assignments before promotion to a general manager role. At the same time, be certain that expat assignments are seen as promotions rather than simply “must have” assignments. Make it easier for your expats to come back to your home country or corporate center, or to go to another international assignment. This is one area where many companies consistently trip up. The best way to ensure that talent does not end up “stranded” overseas is to create a selective and highly visible global talent pool that is reviewed annually by the head of HR, the CEO and responsible executives. Track their progress closely and their time in any assignment. Set assignment limits of two to three years. Always bring your expats back with a promotion, or at a minimum with expanded responsibilities.

Carefully categorize your overseas roles using a “stepping stone” developmental framework. For example, a multinational

16

In our research on organizations that have successfully groomed cadres of global leaders, it became clear that there was a set of best practices shared by many of them. In this section, we will describe what we have learned about these practices and how they support global leadership development and deployment.

If your organization is new to developing global leadership talent, it is important to centralize your global leadership talent initiatives and put them under a separate corporate HR function, reporting directly to the chief HR offi cer. This acknowledges their importance to the corporation and provides greater visibility for the talent pool. It also ensures that global leadership talent is seen as a corporatewide resource rather than simply as a business unit or functional resource. Centralization of this function can ensure greater mobility for

consumer goods manufacturer uses country manager positions in smaller countries as the initial developmental “stepping stone” to become a global leader. Larger countries or those with more challenging markets are used as second general manager assignments, and still larger countries or multicountry regions, such as eastern Europe or southeast Asia, are used as springboard assignments for the company’s leaders who demonstrate the potential to become senior executives.

Finally, build standardized and rigorous performance management and talent management systems that are global. This will take time to build, but it is important to have a performance scorecard that tracks your global leadership talent on business and organization metrics. It

talent across unit and functional silos. For example, a European-based international chemical and pharmaceutical company has its global talent operations housed in International Mobility – a function that oversees all of the company’s expat talent. This function not only coordinates the identifi cation of global leadership talent but also handles contracting and operational aspects of the move and conducts assessments of the talent process itself. In addition, this group coordinates moves back to the expat’s home country or to the corporate center. The latter is a particularly signifi cant function given the frequency with which talent sent overseas report themselves “stranded” in these assignments. It is imperative that the functions of the global talent organization include monitoring time spent in assignments and identifying opportunities for subsequent assignments

should provide rigorous and standardized performance assessments so that you can compare any manager anywhere in the world. Such a system is essential to determine who is among your top global leadership talent and who deserves critical assignments. The employee should also benefi t from the receipt of very clear feedback.

What we have learned in our research on global leadership talent is that the process of building a deep bench of such talent requires an unrelenting commitment of at least seven or more years on the part of your organization. That commitment has to start at the senior ranks of your organization and must be supported by rigorous and integrated talent management practices.

A look at best practices

17

in “stepping stone” global roles, or in roles back in home countries or at the corporate center.

It is important to establish a high-potential talent pool for global leadership roles. Your organization should start with a small pool to ensure that the candidates receive the appropriate development attention, as well as effective tracking. It is important to be absolutely certain that the membership in the pool cascades down to director levels. Best practice companies cultivate global leadership capability early in a manager’s career. Ideally, your organization would therefore have global talent pools for each level of your leadership pipeline.

Identify jobs around the globe that are the most appropriate grooming opportunities for global leadership. These jobs may change over time as market conditions evolve and as local talent markets mature, so it is important to review these positions every few years. That said, it is critical to have designated jobs across the world reserved primarily for your global leadership pool. Choose these roles based on your company’s strategic goals for global markets, as they directly affect the demand for leadership talent.

As we noted earlier, open job postings are an important best practice, especially at junior levels. They allow employees the opportunity to identify themselves as candidates for open global leadership positions. It is important, however, that high-potential identifi cation processes supplement open postings. Most of our best practice fi rms had extensive tracking systems and talent pool databases that allowed them to identify potential candidates for individual job openings from across the world. Within a surprisingly short period, they could source multiple internal candidates and place the ideal candidate in a global leadership role.

In an increasing number of companies, international assignments are becoming a threshold requirement for many executive roles. At a leading consumer goods

company, one international management assignment is required for entry into the executive suite. Another fi rm has a policy called the triple-two rule. To attain executive roles, managers must have experience across two of the company’s operating groups, two functions, and two countries. We believe this requirement sends a powerful message about the importance of international experience for senior leadership roles.

To ensure a successful on-boarding experience into global leadership roles, a program of host- country mentors is a common best practice. For each expat leader, a local mentor is assigned to assist with promoting relationship ties and with accelerating the knowledge base of the incoming leader. The mentor needs to be an individual who is well established within the host country, possesses a coaching capability and is not the expat’s direct supervisor. In addition, cross-cultural training specifi c to the country or region to which the individual is being assigned is particularly helpful. Few companies excel at the practice of addressing the family side of the expat global leader, but the best work at identifying opportunities for spouses to fi nd work, if they so desire. They also assist in family needs around schooling, daycare and integration into the community and prepare the family for the challenges they will face in the move to a new country.

Although somewhat rare, the administration of a 360-degree feedback survey is a best practice for global leaders. Ideally, this feedback is provided within the fi rst three to six months in the new role, giving these leaders early indicators of their effectiveness. From this data, they can quickly assess the areas in which they need to adapt their leadership approach to the new environment .

At the executive level, it is important to reinforce the importance of global leadership through your executive education programs. Modules on global markets and leading in cross-cultural contexts, as well as presentations by executives in global roles, should

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be ongoing components of your organization’s programs. Wherever possible, involve executives who are not in global roles in part-time global project assignments.

Finally, it is imperative that your CEO and his or her executive team reinforce in their actions the importance of a global leadership capacity. This can take the form of active involvement in the identifi cation and reviews of the global leadership talent pools. Executive communications and decisions should showcase the importance

of global markets to your organization’s future. Promotions into the executive ranks with rare exceptions (say the CFO or other highly specialized functional executives) should have at least one international experience as a prerequisite. If action learning is used as an educational tool for developing a global mindset, executives should be the project sponsors. In all of our best practice fi rms, the senior team was highly committed on multiple fronts to the critical role of global leadership talent.

The next step involved in-depth interviews with 15 global companies. The interviews were conducted with executive level HR offi cers who were responsible for the talent management and leadership development initiatives of their organizations. From these interviews, we were able to confi rm the utility of the capability framework and fully vet the best practices for development. The interviews also enabled us to identify the barriers to a global leadership capability.

We approached our research on global leadership in two ways. The fi rst step involved an in-depth literature search; we examined over one thousand studies and research papers on the topic. From this body of work, we identifi ed the literature’s consistent themes and identifi ed best practices that organizations were deploying to develop their global leadership talent – we choose only practices that were described as important contributors to development.

Research methodology

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Jay Conger is the Henry Kravis Research Chair Professor of Leadership at Claremont McKenna College in Claremont, California, and the faculty chair of the Kravis Leadership Institute. He is also a Visiting Professor at the London Business School. One of the world’s foremost experts on leadership, Jay is frequently quoted in the Wall Street Journal and other business periodicals, where he analyzes people and trends in the executive suite and in the boardroom. In recognition of his extensive work with companies, Business Week named him the best business school professor to teach leadership, and one of the top fi ve management education teachers worldwide. The Financial Times has ranked him as one of the top global executive educators. In his 25-year career, Jay has worked with more than 350 organizations.

Ketan H. Mhatre is an Assistant Professor of Psychology at Claremont McKenna College in Claremont, California. He earned his Master of Management Studies degree from Mumbai University and his PhD in organizational behavior and leadership from the University of Nebraska. He undertook his postdoctoral work at Claremont McKenna College’s Kravis Leadership Institute for a year and a half, before assuming a position at the college as a Visiting Assistant Professor. Ketan’s research interests include authentic leadership and authentic leadership development, positive psychological capital, trust, nepotism in leadership contexts, leadership infl uence tactics and time perception in leadership. His publications include research articles in several peer-reviewed journals as well as book chapters in edited books on leadership-related topics.

Mercer is a leading global provider of consulting, outsourcing and investment services. Mercer works with clients to solve their most complex benefi t and human capital issues, designing and helping to manage health, retirement and other benefi ts. It is a leader in benefi ts outsourcing. Globally, Mercer’s Human Capital business helps organizations make and implement the right choices regarding their investments in people in the areas of human capital strategy, talent management, rewards, and human capital operations and technology solutions. Mercer’s 20,000 employees are based in more than 40 countries. The company is a wholly owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York and Chicago stock exchanges. For more information, visit www.mercer.com.

About the authors

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Mercer Global Leadership ‘Best Practices’ Survey

How proficient are your global leadership development practices?

This survey will help you assess the extent to which your organization reflects a best practice model when it comes to global leadership development. Take a moment and rate your organization by using a simple scoring system:

2 = Statement is true for our organization 1 = Statement is partially true for our organization 0 = Statement is not true for our organization

Global leadership development practices Your score

1) My organization has a centralized function that is dedicated to global leadership talent and expat assignments. It effectively coordinates the identification, contracting, operational issues, and assessments of our global talent pools.

2) My organization effectively plans and coordinates the moves of global talent and ensures that after assignments they are transferred to rewarding roles in other parts of the globe or in their home countries or at the corporate center.

3) My organization effectively prepares global talent and their families for the personal challenges they will face in their international assignments. They also assist with helping spouses find work opportunities as well as resources for schooling and housing.

4) We have established global talent pools that cascade down to the director level. We effectively identify talent for these global talent pools as well offer them consistent opportunities for development and promotion.

5) We have identified positions worldwide that are considered grooming opportunities for our global talent. In the majority of cases, these jobs are reserved for our global talent pool. These positions are actively tracked by our organization.

6) Our global talent jobs are built around a ‘stepping stone’ model where promotions lead to increasingly complex global assignments in scope and scale using the unique economic and political demands of individual countries and geographic regions as the parameters.

7) We have a global leadership capability model that is deployed to help with talent development. It is unique to global roles.

8) My organization has open job postings for international assignments. Any employee can identify themselves as candidates for these roles.

Global leadership development practices Your score

9) We start to identify candidates for global assignments at the manager level and regularly put selected manager level employees on short term or long term international assignments.

10) We require at least one international assignment before promotion into an executive position with the exception of certain specialized functions.

11) My organization offers newly assigned global leaders a host mentor in the countries to which they are assigned. This individual helps them in building local relationships, accelerating their knowledge, and in coaching them in cultural requirements.

12) Within the first year of their assignment to a new global leadership role, individuals receive a 360 feedback assessment from their in-country colleagues to assess their progress and effectiveness.

13) Sessions on our global markets and on cross-cultural leadership are offered in our executive education programs.

14) Our top executives are actively involved in reviews and identification of our global leadership talent pools.

15) We regularly do leadership pipeline projections to determine not only how many leaders we will need in the next 3-5 years but also forecast how many global leaders we will need.

TOTAL

Results

If your organization scored:

20-30 points: it is a best practice company.

10-19 points: global leadership development is in need of greater attention.

0-9: it is an organization that is poorly positioned for global leadership demands.

For more information about how Mercer can help you develop people who can effectively lead and manage across cultures and countries, please contact:

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Jason Jeffay Brenda Wilson

Renato Dorruci Colleen O’ Neill

+1 404 442 3125 +852 3476 3813

+39 02 7241 31 +1 404 442 3516

jason.jeffay@mercer.com brenda.wilson@mercer.

renato.dorruci@mercer. colleen.o’neill@mercer.

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