Making European Managers: an Overview

MAKING EUROPEAN MANAGERS: AN OVERVIEW

John Storey, Loughborough University

‘Making European Managers’ /‘Making Managers European‘. The subject is controversial. Just a few years ago it seemed rather less so. In the late 1980s there was much talk of the need to create ‘Euro-managers‘ in time for ’1992’. Such calls, however, soon appeared premature. Seasoned managers with extensive experience of managing expatriates and of managing overseas assignments for ’international managers’ were more inclined to refer to the ‘myth of the Euro-manager’.

Now, it is possible to take a rather more realistic view of the implications of Europe for those responsible for management development. The 1992 project of the removal of non- tariff barriers to create a Single European Market begins in earnest in January 1993. Coinciding with the movement towards this has been a wider shift towards the internationalising of business. British companies such as Pilkington’s have started to relocate the headquarters of core businesses to Brussels. And, for many new players, ‘internationalising’ has, in practice, essentially meant moving into Europe.

In this new climate, it is worth reflecting upon the gaps in understanding and knowledge which still remain in this area. There are important emerging research agendas and key items on the practitioner’s agenda to be addressed.

Coinciding with the early outburst of enthusiasm for developing ’Euro-managers’ were contributions which centred on managing expatriates (Brewster, 1988; Walsh, 1985; Lewis, 1984; Mendenhall and Oddou, 1986) and general guides to ’doing business in Europe’ and managing across cultures (Brown, 1991; Guy and Mattock, 1991). This time around, the idea of ‘making European managers’ is not being addressed in quite the same narrow terms as before. There is a greater consciousness of the range of strategies open to firms - joint partnerships, licensing, acquisition, and so on (Bartlett and Ghoshal, 1989; Ohmae, 1990). A common underlying feature of this range of business strategies is the need to gather intelligence about management systems and management labour markets in other Euro- pean countries. It has been said by Ohmae that internationalising is not now really an option - it is a matter of survival. In the face of competitive inroads into British product and labour markets, information about Europe is especially critical. It has already been widely noted that in the scramble for scarce specialist talent, the flow, from a British standpoint, is more likely to be outwards rather than inwards. The demand for international managers seems likely to continue increasing at a time when the supply is decreasing.

In consequence, the ’making of European managers’ connotes a wide set of issues - including, for example, not just training and developing British managers to operate in Europe but also the recruitment of Germans, French, Spaniards and others to the management stock, and the acquisition of overseas national teams through takeover and merger.

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JOHN STOREY, LOUGHBOROUGH UNIVERSITY

In order to meet these needs the Call for Papers for this special issue invited attention to three themes: reviews of management development in any single European country; comparative reviews of any two or more European countries; and analyses of how managers are developed to work transnationally. Our title is therefore intentionally ambiguous: we are concerned here both with making managers for Europe (ie managers able to operate across national boundaries) and with making managers in Europe (ie highlighting the distinctive approaches to management development which are to be found in the different countries). This overview article is structured into two parts which reflect this distinction.

MAKING MANAGERS FOR EUROPE

The notion of the 'Euro-manager' may not quite be a myth, but the extent to which there is a clear conceptual and practical difference between this species and the 'international manager' remains open to question. For the purposes of this review, the phrases 'Europeanisation of management' and 'internationalising of management' will largely be used interchangeably. The competencies required to work effectively in a range of European countries and to work in countries outside Europe can be expected to be broadly alike, and the same point applies even more to the processes needed to facilitate the acquisition of such competencies. If there are differences, these can be expected to be essentially matters of degree rather than of kind.

Internationalisation of business is certainly proceeding apace. A large part of this process is accounted for, however, within the European Continent. For many firms therefore the international manager issue is tantamount to being about Europe. Whether seeking to develop British managers to adopt an international outlook and competence, or whether seeking to recruit Continental European managers in order to support moves into Europe and/or make up shortfalls in British recruitment, the need to increase understanding about the European management scene is the paramount concern. It is to this objective that this edition of HRMJ is directed.

Recruiting and retaining international managers and managers in Europe is not just about the specifics of MBAs and in-company training. The question goes much wider and takes in the span of human resource management: motivation, recruitment, rewards - and welfare. Indeed, many of the central activities in managing expatriates are highly reminis- cent of the traditional welfare function. 'Making managers', whether for Britain or for Europe, is intimately tied in with the whole question of managing the management 'stock'.

International HRM is, however, even more complicated than nation-specific HRM. Extra problems arise from lack of easy access to information. There is always the temptation therefore to localise the various aspects of HR - including management development (Hedlund, 1981). The multinational structure of the organisation is in itself an additional challenge. HR practices are of course highly subject to the competing influences of parent nation and host nation cultural influences and customary practices. There is a need for understanding of, and sensitivity towards, differences in language and social and political systems (Enderick, 1985; Buckley and Brooke, 1992).

Characteristics of an international manager The search for the characteristics of the international manager and the associated attempt to

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’profile’ such a person is what is often considered to be the heartland of this subject area. What are the requisite competencies of the international manager? Essentially, the process followed in order to answer this question is to attempt to map out the role requirements and to follow this with the associated person specification. A recent Ashridge survey produced the results as set out in Table 1.

TABLE 1 Key Characteristics of the International Manager

(% of respondents who ranked a characteristic as among the five most important)

Strategic awareness Adaptability in new situations Sensitivity to different cultures Ability to work in international teams Language skills Understanding international marketing Relationship skills International negotiation skills Self-reliance High task-orientation Open, non-judgemental personality Understanding international finance Awareness of own cultural background

% 71 67 60 56 46 46 40 38 27 19 19 13

2

Source: Barham and Oates, 1991:69.

It is of course difficult to gauge the validity of such a list. To what extent do the firms surveyed actually use such a ranking when choosing their international managers? Or is this rather like one of those ‘key requirements for a good leader’ lists where the relationship to practice is often very slim?

Activation of international criteria lists can occur at the initial selection stage (for example, when recruiting new graduates) or at a secondary stage when sorting through the extant workforce for suitable internal candidates. Matsushita uses a five-point SMILE list of criteria in its internal selection: S - speciality (this refers to the need for a good grounding in at least one core skill area); M - management skill (especially to motivate); I - international (willing to learn and adapt); L - language facility; E -endeavour (vitality and perseverance) (Bartlett and Ghoshal, 1989). Again, such a list raises more questions than answers. Are these really the most critical criteria? Are they universally appropriate?

Types of international manager It seems much more probable that there is no one profile of the ideal international manager or manager for Europe.’ There are different roles to be played and therefore different role requirements and different person specifications. Some key ones can be suggested: (i) the



home-based manager with a central focus on international markets and on overseas players; (ii) the multi-cultural team member who works on a series of international projects; (iii) the internationally mobile manager, who undertakes frequent, short visits to numerous overseas locations, remaining loyal to the parent culture; (iv) the traditional expatriute, who cames the parent company culture but spends lengthy assignments in a limited number of host countries representing the parent company; and (v) the transnational manager, who moves across borders on behalf of the corporation and is relatively detached from any single company HQ. In addition to these different types of 'international managers' there are of course other specialist non-management roles which involve international activity - including, for example, sales staff, trainers, buyers, and technical experts.

The implication arising from this delineation of different types of international manager is that they will almost certainly require different sets of competencies and will therefore have different developmental needs.

Factors influencing the demand for different types of international manager

Hugh Scullion's research on international management as reported in this volume found that while his sample of British and Irish multinational companies had formal policies which favoured using host country managers, in practice they continued to rely heavily on expatriates. The companies said they had difficulty in finding sufficient local talent; that expatriates enabled easier corporate control; and that expatriates had a greater understanding of corporate values and culture.

Other research has shown that there are a number of factors which influence the diverse demands for various types of international manager. Key ones include size of company, type of sector, and stage of development as a corporate player on the international scene. For example, the number of expatriate managers per company has been shown to be related to the stage of development a firm has reached in its internationalising (Perlmutter, 1969; Franko, 1973). But this is not a linear association. In fact recent trends reveal that mature, large players on the international scene such as Unilever, ICI, Philips, and Shell are reducing their expatriate numbers in line with a policy to increase the localisation of management. Perlmutter outlined certain basicoptions: ethnocentric staffing (or what Heller, 1980, termed the 'colonialist' approach) where all key positions are filled with managers from the host country; bilateral staffing where locals fill host nation posts and parent nation citizens occupy corporate HQ posts; and international team building either on a regional or a truly global basis (Buckley and Brooke, 1992).

Kenichi Ohmae (1990), now managing director of McKinsey consultants in Tokyo, has suggested there are five sequential stages in the progress of corporate internationalisation. These move from a home-based exporting company through various stages of overseas production presence to the final stages where corporate functions such as R&D, finance and engineering are transferred and there may even be multiple chief executive officers around the globe. Duplication is seen as subsidiary to market share. Corporate identity, however, becomes an issue - a special effort has to be made to maintain a clear corporate raison d'ttre. Once again there are clear implications arising from this model for the practice of international management development. Each stage of corporate internationalising will require different types of internationally-oriented managers. Their training and development will



need to reflect these different needs. The recommendations from the experts relating to the final transnational stage, for example, are that managers under these circumstances will need to ’think globally and act locally’. And that transnational managers must acquire a new ’mental set’; the matrix structure must be in ’managers’ minds’ (Ohmae, 1990; Bartlett and Ghoshal, 1989). The ’transnational is not a specific strategic posture or a particular organisational form. In essence, the transnational is a new management mentality’ (Bartlett and Ghoshal, 1989: 17). Management mentality becomes the ’corporate glue’ (p.175). From their study of 236 executives in major companies such as Proctor and Gamble, Unilever and Ericsson, Bartlett and Ghoshal continually emphasise the impediments to transnational competitiveness arising from managerial ’parochialism’.

How might European managers be developed?

The main recommendation emanating from most current reviews is that companies need to take a strategic approach to management development - ie one which treats potentially all managers, worldwide, as constituting a corporate resource. This requires the establishment and maintenance of an electronic database of all relevant personnel. The Japanese transnational NEC has a regster of this kind with 20,000 names. This is a pool of global talent available for trawling in the event of overseas postings. In practice, for most companies, however, a central register usually entails a selected few from the total management population. Scullion’s research, reported in this volume, shows that the majority of British multination- als in his sample were failing to develop host country high potentials beyond the confines of their own countries.

Scullion’s research also reveals a number of impediments to the future development of international managers, or ’managers for Europe’. Over 70 per cent of his sample firms said they anticipated shortages of international managers during the next five-year period. They expected fierce competition from Continental European companies for the small pool of international talent. They also reported growing resistance to international mobility rather than less! This was attributed to job cuts in the UK which made candidates apprehensive about re-entry; an apparent greater unwillingness to disrupt children’s education; quality of working life considerations; and dual-career problems. One suspects there will be a need for further research to weigh accurately the significance of these sorts of reported factors.

The development of European managers might in any case also be driven at a level above the individual corporation. For example, in his article in this volume Mark Easterby-Smith analyses the prospects for the ’Europeanisation’ of management education arising out of initiatives being driven by the European Community. Exchange programmes such as the one examined by Steve Fox, also in this volume, represent one key path.

Another line of development is the work being done to internationalise the curriculum and to standardise, in some measure, course structures. In part this tendency can be seen reflected in the move towards ’semesterisation’ in higher education. A further move is towards the standardisation of qualifications. Perhaps the most direct steps being taken, however, are those which entail a definite intent to equip students to operate successfully in a range of European countries. Easterby-Smith sees some of the polytechnics and the grundes icoles going further in some respects than the prestige institutions such as INSEAD and LBS. These latter, he observes, produce people who are oriented towards the large

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JOHN STOREY, LOUGHBOROUGH LJNIVERSUY

multinational enterprises. But, in the recent initiatives of the polytechnics such as place- ments abroad, he detects a possibility that they may 'be able to go a step further by providing sufficient language skills and local knowledge to enable students to operate effectively within the labour markets of other countries' (p.34).

A similarly relatively optimistic view is taken by Steve Fox. He examines the prospects for a distinctive 'European management' emerging out of the different national systems. In particular, he examines in some considerable detail one of the programmes emanating from the European Commission - the European Course Credit Transfer Scheme. This allows different qualifications and courses to be evaluated across the Community and can thus be expected to facilitate greater student and worker mobility. Hence, while Scullion empha- sises the 70 per cent of firms in his sample worried about future recruitment of international managers, Fox traces out some of the supply implications of the various European student mobility programmes. He estimates some 30,000 students graduating each year with experience of mobility and destined for managerial jobs in Europe. If Britain was to get an equitable share of these, the number available would be some 5,100 per annum. Now, as Fox says, 'if we presume such individuals will rise fast to senior positions, in twenty years time there could be 100,OOO of them in the UK management population pipeline queueing up for jobs in the senior manager category'; others would be scattered through the middle management ranks 'comprising roughly 10 per cent of that category' (p.86).

In talking about the prospects for a pan-European management in the full-blown sense, Easterby-Smith and Fox may appear to be well ahead of reality. The chances of something like this occurring will be influenced by the extent, and the embeddedness, of the current differences between the various national systems in Europe. It is towards this very question that we now turn.

MAKING MANAGERS IN EUROPE

A strategy based on joint partnership, acquisition or simple expansion into Europe may not necessarily be dependent upon the production of 'Euro-managers'. Successful European operation may instead be based upon the recruitment, retention and motivation of local managerial talent. Under these circumstances the prime requirement is for intelligence about the various managerial labour markets.

Theinformation contained in thevarious articles selected for this journal reveals that there are many marked differences in the way the various European countries make their managers. These differences are found in the institutions responsible for the education, training and development of managers and in the cultural assumptions and practices which underpin these. The articles by Mark Easterby-Smith and by Peter Lawrence respectively, illuminate especially well these two main areas of contrast.

Easterby-Smith shows how the prospects for the 'Europeanisation' of management education are influenced by the different national systems of education (and management education). At the institutional level thedistinctive French system, for example, is described in some detail and with great clarity. As Easterby-Smith explains, in France there are really two systems of higher education: the public sector universities and the semi-private grandes kcoles. The ancient universities were considered ill-suited to practical training seen as a priority in the Napoleonic era. 'Accordingly a number of separate schools were established,


MAKING EUROPEAN MANAGERS AN OVERVIEW

mainly to train engineers and administrators with the skills to run the growing French empire. The most famous of these are the Ecole Polytechnique and the Ecole Nutionale d’Administration, which have for a long time trained many of the people who occupy top posts in the public and private sector in France’ (p.25).

The exclusive, competitive educational route into and through the grandes Pcoles colours the whole approach to making managers in France. Subsequent entry to the cadre is highly dependent upon early academic success and the associated progress through these selective institutions. The great expansion in management education in France in recent years has largely been accounted for by thegrundes Pcoles. But, as Easterby-Smith notes, there may now be some signs of change: applications are up for the more practically-oriented IUTs (broadly equivalent to the British poytechnics) and there may be some turning away, he suggests, from the traditional analytical mode to the more practical.

Easterby-Smith also reviews current practice in four other European countries: Spain, Holland, Germany and Italy. A notable feature, in addition to the often marked differences between each of them, is the intimation of change. In Germany, for example, ’there seems to be a growing mobility for managers between German companies, and as career possibili- ties begin to open up across the European Community it is likely that the portability of the MBA qualification will become increasingly attractive to young Germans’ (p.32).

Peter Lawrence’s article nicely complements that of Easterby-Smith’s by explaining the deeper cultural well-springs of the differing approaches to management in France and Germany. HRM and ‘management development’ are revealed as essentially Anglo-Saxon constructs. A similar point can be derived from the IRRU study of the differences between management development in Britain and Japan (Storey et al., 1991). The Japanese gave far more serious regard to the general issue of ’capability development’ than they did to the narrower construct of management development. A far wider cohort was thus drawn into the developmental net, and the range of competencies being attended to was much broader than the Anglo-American notion of what comprises ’management skills’ (something relatively detached from the actual production process).

The roots of the British approach are traced by Lawrence to American notions of the ’teachability’ of ‘management‘ as a distinct activity. There is an important clue here in my view to the rather skewed nature of what passes for ’management development’ in the British context. Management training in Britain is largely conceived to be about communi- cation, leadership, presentation skills, interpersonal skills, teambuilding and the like- rarely about production methods and operational matters. The well-springs of this arise in part from British emulation of American business practice but also from a certain anti-industrial strain in British culture which undervalues engineering and production in favour of the ‘great leader’ conceptualisation of ‘management’. The advantage gained by taking a broad international and cultural view is that it throws into sharp relief many of the taken-for- granted assumptions about the nature, scope and focus of management training and development in our own country.

These points are brought out in the various reviews of French and German practice in this volume. Making managers in France is found to be very different from the process in Britain and Germany. In France, ‘management’ is a ‘state of being’, it is associated with membership of the technocratic cadres. The prized capabilities of management relate to analysis, rational



decision-making and synthesis. The demand for this sort of expertise is matched by the French educational system which promotes numeracy, literacy and scientific capability and sorts and sifts its young people through an exclusive and elitist system culminating in competitive selection for the grandes koles which give primacy to engineering, technical and business subjects. As Lawrence observes, 'all this fits very nicely in a milieu that conceives of management as being about ordering and deciding on the basis of analysis and synthesis, rather than about interpersonal manoeuvring' (p.19). Thus, the nature of the management development practices in France is traced back to the underlying notion of what 'management' is, which, in turn, is traced to its historical roots with industrial management being seen as closely allied to the activities of a technocratic civil service.

Management development in Germany has its own distinctive features. A high premium is placed on specialist, functional knowledge and expertise - especially of a technical kind. Managerial labour markets and career paths are intimately tied in with this characteristic feature. Hence, for example, while there is inter-firm mobility, this is largely within the confines of the same function and indeed within the same industry. The free-floating 'manager of anything' is an alien idea.

The distinctive conception and practice of making managers in Germany can again be traced to the wider educational, legal and social system. 'Management education' is not found in the same way as it is in Britain (there are no equivalents of the British Institute of Management or the Diploma in Management Studies). As Lawrence points out, 'The Germans typically have difficulty with the idea of management as something general, as something that can be viewed in the round, taken apart, and generalised about. When Germans look at a company they do not see a need for management: they see a variety of departments and functions requiring specialised knowledge and experience' (p.21). To a large degree this runs directly counter to recent trends in Britain where the emphasis has, if anything, been increasingly placed upon 'general business managers' being held account- able for an increasing number of demarcated strategic business units.

The analysis of distinctive European practice in management development is examined at a more detailed level by Bournois and Roussillon. Their recent research on the management of the 'highflier' system in France is published for the first time here. The article, in giving details of in-company development practices, adds a vital piece to the wider jigsaw constructed by Lawrence and Easterby-Smith. Problems at the highest executive level are attributed by Bournois and Roussillon not to the educational systems, 'but (to) the use that firms make of their graduates. No firm produces its best executives spontaneously, automatically prepared for difficult and demanding careers, even if it recruits from among the top of the young graduates. Only "high quality" career paths are likely to bring out and prepare quality leadership' (p.38). The concentration on 'hipos' (high potentials) is seen as a particular obsession of the French. Yet the assessment centre tool is rarely used -unlike the situation prevailing in the Anglo-Saxon countries. The results show that, ironically, perhaps the main criterion used for assessing high potential is the level of performance of a person in their present post.

Interestingly, in the light of what Lawrence and Easterby-Smith have to say, few firms reported that they gave much weight to qualifications and attendance at one of the grandes kcoles. As Bournois and Roussillon observe, this was a surprising result. The main methods

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used to identify the high potentials were found to be annual performance appraisal and other information derived from senior management reports. The use of systematic devices such as tests were extremely rare. It is interesting to reflect upon the fact that this reliance on the subjective judgements made by senior managers would of course allow for a bias in favour of those individuals from the elite schools - even though this factor fails to be recorded on questionnaires.

Finally one might ask, what innovative methods for management training and development are being forged in Continental Europe which deserve a trial in the British context? Thorbjorn Meyer’s article affords an insight into some of the innovative practices in management learning now tried in a range of countries: Denmark, Sweden and Germany. This article is particularly interesting and significant because it demonstrates a high level of commitment to an elaborate ‘stakeholder’ approach to learning built on a facilitated process. The process which is used surfaces the underlying values of key stakeholders. The article thus gives a detailed demonstration of how the Harvard stakeholder model of HRM (Beer et al., 1985) can be implemented in practice -using management learning as the vital conduit. At the heart of the model used by the author/facilitator is Argyris’s (1990) notion of ’double loop learning’ - ie a willingness to reappraise not just actions but the preceding ‘governing values‘. This represents, therefore, a real challenge to management. A relevant observation from Argyris on this point can also suitably stand as a final thought on the whole issue of learning from, and about, other countries - ie the central theme of this special issue. Argyris (1990:108) maintains that the criterion for this type of learning ‘is not simply have individuals gained a new insight or new idea. Learning occurs when they can produce the insight or design and can also produce new consequences from the insight.’ It may be hoped that practitioners and analysts may draw upon the insights afforded in this volume to construct ’new consquences’.

NOTE

1. I wish to acknowledge the value of conversations with my colleague David Buchanan in helping to clarify the various types of international manager outlined in this section.

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Making European Managers: an Overview

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