US Versus European Managers

The Financial Times has a story today about a report from executive search firm Heidrick & Struggles:

Chief executives of large US companies have far less international experience than their UK counterparts, a sign of corporate America’s struggle to balance the lure of globalisation with the needs of its large domestic market, new research will reveal on Tuesday.

According to the study, only a third of US CEOs at Fortune 100 companies have lived or worked abroad for at least a year, compared to 67 percent of chief executives at the FTSE 100.

I find it interesting that with such an emphasis on globalization, so few US firms have international experience in their CEOs. Some in the US, including Intel's chairman, Craig Barrett, say that visiting markets can be enough. Excuse me, but that seems like arguing that someone experienced in a service business can understand a manufacturing corporation by visiting some factories. Granted, companies often find it useful to recruit people with backgrounds in industries different from that of the company, but it then takes a pretty long time to get up to speed, and that is with having all the information and in-house experts at hand.

There have been so many glaring errors that US companies have displayed when doing business overseas that you'd have to wonder why anyone would think that visits would be enough. That doesn't let you understand the dynamics of other cultures, business atmospheres, or political systems. No, you won't gain experience in all the places that you'd ideally want as CEO, but at least you'd have had your nose rubbed in the typically problems that will occur when doing cross-cultural business, and you'd hopefully have learned some of the principles that help you navigate the waters.

In the past I've interviewed Steen Kante, the former US head of IKEA during its heady growth years in the 1990s. "There were probably no land mines we could step on that we didn’t step on," he said. They made mistakes in a host of ways - not realizing that American cars, larger than European counterparts, didn't have to get a chair in a box, and that they didn't want to deal with the assembly. European beds were smaller and wouldn’t fit into existing American frames, so consumers here assumed that IKEA wanted to force the sales of new mattresses and box springs. "You’ve got to understand how the consumer thinks and adjust to them," Kanter said. "It took IKEA years. But when we finally got it, we got it." That was with someone living in the US.

Yet, if you asked American executives whether European counterparts could come in and start effectively operating in the US, I suspect they'd laugh. You have to know the market, the culture, the economic structure, the government ... all the same things you need to know when operating overseas. To be fair, the article, and study, I guess, suggests that Americans are concerned that they will be overlooked if out of sight for a significant period of time. The American market is also so large that it does take significant attention. But over time, I wonder if companies will come to see the need for overseas experience - and will that put US managerial jobs in jeopardy of "outsourcing," after a fashion.

Something that did surprise me was that American companies did far better than European counterparts in succession planning, with 86 percent of the Fortune 100 CEOs being promoted from within. There wasn't a number available for the percentage at the FTSE 100.

US Gambling Stance Endangers Copyright

The New York Times has a great story about how US attempts to stop its citizens from using online gambling in Antigua could result in that country getting permission from the World Trade Organization to infringe on US copyright and sell copies of American products. Essentially, Antigua took the US to the WTO court, complaining that we were selectively allowing online gambling. So far, the US has lost the original case and an appeal, but has been ignoring the ruling.

But not complying with the decision presents big problems of its own for Washington. That’s because Mr. Mendel, who is claiming $3.4 billion in damages on behalf of Antigua, has asked the trade organization to grant a rare form of compensation if the American government refuses to accept the ruling: permission for Antiguans to violate intellectual property laws by allowing them to distribute copies of American music, movie and software products, among others.

Wow. The WTO is stuck because it must follow its own rules. The US doesn't want to allow offshore gambling, but by protesting and ignoring the ruling, it opens doors for other countries, like China, to do the same. And if Antigua gets permission to go ahead, what can the US actually do to stop sales and the losses that businesses would feel? This is the hidden problem of talking about completely open markets - eventually you get caught by the law of unintended consequences. Most countries that talk about open markets are all for them - for others.

Managers See Top Take-Home Pay in Surprising Places

Where do you think managers make the best money? The US? Germany? The UK? According to the Hay Group, a management consulting firm, if you take into account cost of living and taxes and look at the what the effective buying power is, Saudi Arabia and the United Arab Emirates top the list. There are seven European countries in the top 20 and the US at spot 24. According to the press release with the information:

“Companies are operating in an increasingly open and competitive global economy, and emerging markets are offering managers higher disposable incomes than established countries –which is making these locations an attractive prospect for management talent,” said Iain Fitzpatrick, Director Reward Information Services for Hay Group North America.

The company used its own proprietary data to make the comparisons. Here's the table of results:

Hay Group's Management Buying Power

Rank	Country	Disposable Income
1	Saudi Arabia	229,325
2	UAE	223,939
3	Hong Kong	203,947
4	Russia	157,348
5	Turkey	154,762
6	Mexico	152,283
7	Ukraine	149,118
8	Thailand	147,547
9	Singapore	142,655
10	Argentina	138,188
11	Poland	128,537
12	Spain	128,197
13	Switzerland	127,732
14	China	126,281
15	Greece	126,102
16	Malaysia	126,026
17	Brazil	123,766
18	Lithuania	122,941
19	Germany	122,427
20	Ireland	117,010
21	Portugal	116,678
22	Romania	115,280
23	Austria	112,906
24	United States	104,905
25	Netherlands	103,823
26	Australia	103,578
27	Japan	102,604
28	Italy	101,487
29	South Africa	100,257
30	New Zealand	100,136
31	France	98,117
32	South Korea	97,867
33	Latvia	97,409
34	Czech Republic	97,352
35	Egypt	97,001
36	India	92,750
37	Hungary	91,358
38	Belgium	89,632
39	Slovakia	86,632
40	United Kingdom	86,367
41	Denmark	82,697
42	Canada	81,613
43	Estonia	80,908
44	Norway	77,202
45	Sweden	75,581
46	Finland	74,038
47	Indonesia	71,839