How can organisations adapt their board and senior management structures to accommodate a greater international focus?
I am cautious about how much changing a board’s structure can help achieve significant business goals. It is important to ensure that structural alterations are not seen as a panacea for addressing deeper-rooted but there are some obvious barriers that a creative approach to structure can address. One way for companies to access this less mobile advisory talent in further-flung markets is to create regional advisory boards that harness specialist expertise and are less onerous.
At the most senior executive level, bringing in individuals with relevant international experience may also present challenges. At organisational level, many companies are developing regional hubs from which leaders in more remote regions can run the business. This increases their ability to attract the best local talent but it only makes sense if there is also a strong operational argument for running some of the business from that location.
How can you reduce discomfort around risky senior appointments for the organisation and for individuals?
As businesses become more diverse in terms of gender and geographic or cultural background, senior executive and board appointments will carry more risk.
When incomers were mainly senior male executives from the home country of the company in question, new arrivals were often already known to many of those on the management team and could be expected to understand the cultural norms and integrate effectively with time.
Diverse appointments take longer to integrate and there is a greater risk of some not working out. To mitigate this, we developed an approach that focuses heavily on the cultural and relationship dynamics that an incoming executive is likely to find. An incoming executive can be prepared for many of the softer issues he or she is likely to face – with much of the work being done long before their first day in the role.
Which categories of new executive do you consider to be particularly high risk?
Executives who have been brought in from new geographies or sectors to help a company implement its growth strategy are likely to be higher risk. This is usually because they have less knowledge of the sector or region they have moved to, or because there are differences in cultural norms such as how to manage teams or make decisions. If these differences are not handled correctly, it can take longer for the executive to be accepted into the company or they might even be derailed completely.
During the events we have hosted to discuss issues around career transitions with clients, we have learned that almost 40% of organisations have no formal integration process to support new hires, even those at particular risk.
We asked 200 senior executives – many of them HR directors – which new executives they considered to be the greatest risk. Top of the list were external hires taking control of a business unit or making an international move. This was closely followed by the appointment of an external diversity candidate. Less expected, however, was the high risk associated with some internal appointments – notably someone taking leadership of a business unit for the first time or moving abroad. One of the biggest risks here is that the organisation assumes they will not need much support to integrate. However, the results of our research suggest that if they come from another geography or business unit, the integration challenges can be almost as great as for an external hire.
What can HR do to minimise potential difficulties for the organisation?
Apply enough resources to the issue of integration. The lack of investment in this area partly stems from the fact that, historically, no obvious budget has been allocated to the managing of this issue. Equally, companies often delay organising support until the new executive has arrived in the business, by which time first impressions are already being made.
Anticipating integration needs and planning ahead of time to meet those needs will help ensure that the organisation quickly improves its performance in this area.
Many internal departments lack the resources to provide extra help for high-risk new hires. By focusing much more on cultural and stakeholder dynamics, organisations can reduce the risks of integration and help new executives be effective far more quickly.
What can organisations do to better manage the difficulties and risks of a more diverse generation of leaders?
A more comprehensive and holistic approach to integrating senior talent must go hand in hand with moves to extend diversity and become bolder and more lateral in their approach to new hires.
Many organisations have spent time improving their performance through thinking holistically about their systems and processes, to ensure an ‘end-to-end’ approach. The same should be true of their efforts to attract, retain and develop more diverse hires.
Most organisations make the business case for reaching out to a more diverse generation of leaders. The critical question is how far the company is prepared to work through the implications of implementing that decision at all levels and stages. This can mean changes to hiring policies, a greater focus on accelerating integration, a new approach to career management and different priorities for development support.
It is only when an executive’s life through an organisation is thought through in this way that they can feel confident about capturing the value they want for the future of the business.