Headhunting Goes Cross-Cultural

For global companies, finding executives who have knowledge of markets outside their own is increasingly important

A 2007 Whirlpool (WHR) 10-K filing with the Securities & Exchange Commission confirms what the world's most influential executive recruiters (BusinessWeek.com, 8/2/04) have been reporting with increasing frequency and emphasis. The first line of the company's description of corporate risk factors states: "Our ability to attract, develop, and retain executives and other qualified employees is crucial to our results of operations and future growth."

In recent weeks, Whirlpool, the world's largest home appliance manufacturer, reiterated the critical nature of that often-overlooked performance variable in announcing its joint venture with Hisense-Kelon Electrical Holdings, one of the leading Chinese appliance companies.

There is no doubt the two companies will rely on world-class management talent, both local and from all over the globe, to deliver innovative appliances to China's rapidly growing population. But world-class now means that executives must have cross-cultural sophistication and knowledge of markets outside their own. And I would contend that what may have struck Whirlpool shareholders as an interesting note worth repeating in the company's forward-looking statements has some headhunters saying, "I told you so." Indeed, elite executive headhunters from all corners of the globe see this corporate acknowledgement of the power of human capital as a key to global competitiveness.

Human Capital Is Paramount

No matter what you're selling—be it washing machines, mobile phones, or automobiles—global business experience, foreign language skills, and the ability to reach across the cultural divide are becoming increasingly attractive to global recruiters. These are also fast becoming critical leadership competencies for companies that want to bring their products and services to the world stage.

Yet the pressure points of the global economy present hiring organizations with big risks and rewards when it comes to management recruiting and succession planning.

Emerging global markets such as China present both huge opportunities to expand and also big challenges for employers, who must either spread existing management talent over a wider business platform or recruit new talent fast enough to take hold of new customer segments.

The winners in these emerging markets will probably be those who have built up market share in more mature economies. They're the same organizations that have invested steadily in building top-caliber management teams, keeping them engaged with a compelling vision, and retaining them to achieve even loftier objectives.

Given the perspective gained by the world's most influential headhunters, there really should be no excuse for today's employer organizations to misread or misinterpret the corporate imperative to build global operations around great people.

Scarcity of Talent

"The global shortage of general management talent will ultimately impact both the public and private sectors unless companies find better ways to develop people," says Robert Damon, president of North America for Korn/Ferry International (KFY).

By "develop people," Damon is referring to developing management-caliber talent from within (BusinessWeek.com, 1/29/08). In so doing, he's also acknowledging that a lot of companies have failed to cultivate their own leaders.

That message might sound counterproductive for a recruiter who makes a living recruiting exceptional leaders from the outside. But it actually points to many employers' growing realization that they're going to have to continue to recruit from the outside and spend a lot more time building leaders just to remain competitive in an executive employment market that remains much healthier than the broader jobs landscape.

"It's still about people development," says Peter De Jong, a managing director and regional vice-president for the EMEA region for Stanton Chase International, another global executive search firm.

Competitive Pressures Are Growing

Tim McNamara, a managing director with Boyden global executive search in Washington, says the pressures to both build and buy top talent are growing all around the world as companies compete for assets that reveal their true value no matter the location—ideas, innovation, and human energy.

"The continued globalization of the world's economy will require leaders who are significantly better versed in transcultural issues," McNamara says. "The globalization trend, which feeds merger-and-acquisition activity across broad geographic regions, subsequently influences the type of leadership that will be needed to succeed in the reality of a global village."

Krishnan Rajagopalan, global managing partner with Heidrick & Struggles (HSII), concurs with the impact of new, global leadership requirements. "True globalization of talent will even the playing field," he says. "Talent at all levels and in the future, particularly executive leadership, will no longer be restricted to traditional high-GDP countries. Diversity of talent will increase significantly. High-performing companies will embrace this trend and those that fail to recognize it will falter."

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