HUMAN RESOURCE MANAGEMENT
Bulgarian-born Frank P. Popoff became chief operating officer of U.S.-based Dow Chemical in 1987 when he replaced Italian-born Paul Oreffice, who became chairman of the board. Oreffice had replaced Hungarian-born Zoltan Merszei in 1979. On becoming chief of Dow, Mr. Popoff, who had once headed Dow's European division, said, "I had a lot of international experience and I think, for a company that has over 50 percent of its sales outside the U.S., that's very important." As of 1990 Dow's 22-member management committee at the top of the company included 10 who were non-U.S. born and 17 with foreign experience.
This placement of foreign-born and/or internationally experienced persons at the helm of the firm might suggest the process of multinationaliza-tion. For example, Peter Drucker, a leading management authority, stated that a truly multinational firm "demands of its management people that they think and act as international businessmen in a world in which national passions are as strong as ever." A firm whose top management includes people from various countries and with varied country experiences presumably is less likely to place the interests of one country above those of others and supposedly will have a more worldwide outlook.
Whether or not nationality or birthplace of a firm's officers indicates worldwide outlook is debatable. However, the experience of working abroad under some very different environmental conditions is very useful for grasping some of the problems that are not as prevalent in a purely domestic context. In 1980 Paul Oreffice described his foreign experience at Dow as follows:
I would never have risen as far as I have in Dow if it hadn't been for my foreign experience. What I learned in Brazil in the 1960s influenced and advanced my career. ... In a high-inflation country ... the only way we could get dollars to import goods from the U.S. was to go to the exchange and bid on how many cruzieros we would pay per dollar for imported goods. ... I learned the maintenance of margins or replacement cost pricing, which is the only way you can make sufficient profit to buy and build more plants.
S E
In 1990 Oreffice reiterated the importance of this experience when he said:
Our chief financial officer is Cuban, our treasurer is Brazilian, the next man at the top is Italian, and after him comes a Chilean. Native-born Americans seem to have fallen behind in Trea-siny simply because of the wider experience that financial people from other countries have had all over the world.
That most Dow top executives have had considerable foreign experi-c ncc indicates that international operations are an integral part of Dow's total commitment. To bring about this commitment, Dow had to gain a dedication to international business from a broad spectrum of managers. The company estimates that the attitude change took about 20 years to
complete. Until 1954 only about 6 percent of Dow's business was abroad, and over 80 percent of that was from its one foreign subsidiary in Canada. The attitude in the late 1950s was expressed by a company historian as follows:
As for the overseas operations, a majority of the veterans regarded them as a sideline. The foreign market was all right as a place for getting rid of surplus products, but the only truly promising market was in the United States. They questioned the idea of the company becoming too deeply involved in countries whose politics, language, culture, monetary controls, and ways of doing business were strange to them.
Some of Dow's younger managers did not share this ethnocentric attitude, but dramatic steps were needed to convert the majority of managers to an international outlook. One method employed by the company's president in 1958 was to give international responsibilities to people who were widely perceived to be destined for top-level positions in the firm. C. B. Branch, who was managing Dow's fastest growing department, was appointed head of foreign operations. Herbert "Ted" Dow Doan, who at 31 was already a member of the board of directors, went to Europe on a factfinding mission. (Ted Doan's father and grandfather both had been Dow presidents.) Both Branch and Doan went on quickly to become presidents of Dow. Thus the importance of international operations became readily apparent to any manager in the company.
Although the discussion so far emphasizes the importance of international exposure for top-level managers in firms with global commitments, this experience is not the only international management consideration. Firms also must attract and retain high-quality personnel within each country where they operate. These are largely local personnel. To attract high-quality local personnel, Dow feels it must give people from all over the world the same opportunity to reach the top at Dow. Local needs also change as corporate strategies evolve. For instance, Dow had to hire many more non-U.S. scientists and technicians in the 1980s when the company was strengthening R&D in Europe and Asia.
Firms also must transfer people to foreign locations when qualified local managers are not readily available, or to infuse some technology to foreign subsidiaries. When Dow sends managers to foreign operations, what type of qualifications should they have? Robert Lundeen, a former Dow chairman who had served twelve years as president of the Pacific division and three years as president of the Latin American division, gave some indication of his philosophy. After speaking about the obvious technical needs, he said, ".When I worked in Asia, I observed that many Americans seemed to delight in their insularity and that attitude hurts the ability of the United States to do business in foreign countries."
For many years, Dow had difficulty in convincing people to take foreign assignments because of bad experience in repatriating them to acceptable positions. Dow has reacted to this problem in three ways: (1) sending some of its best people abroad so that "everybody will want them when they come back"; (2) assigning higher-level supervisors to serve as "godfathers" by looking after the transferred employees' home-career interests; and (3) providing each transferee with a letter guaranteeing a job at the same or higher level on return from the foreign assignment.
Because many managers have difficulty in adjusting to foreign locations, Dow holds a briefing session with each prospective transferee to explain transfer policies and to provide a briefing package compiled by personnel in the host country. This is followed by a meeting of the transferee and spouse with a recently repatriated employee or spouse to explain the emotional issues involved in the early stages of the move. The couple is also given the option of attending a two-week language and orientation program.
This placement of foreign-born and/or internationally experienced persons at the helm of the firm might suggest the process of multinationaliza-tion. For example, Peter Drucker, a leading management authority, stated that a truly multinational firm "demands of its management people that they think and act as international businessmen in a world in which national passions are as strong as ever." A firm whose top management includes people from various countries and with varied country experiences presumably is less likely to place the interests of one country above those of others and supposedly will have a more worldwide outlook.
Whether or not nationality or birthplace of a firm's officers indicates worldwide outlook is debatable. However, the experience of working abroad under some very different environmental conditions is very useful for grasping some of the problems that are not as prevalent in a purely domestic context. In 1980 Paul Oreffice described his foreign experience at Dow as follows:
I would never have risen as far as I have in Dow if it hadn't been for my foreign experience. What I learned in Brazil in the 1960s influenced and advanced my career. ... In a high-inflation country ... the only way we could get dollars to import goods from the U.S. was to go to the exchange and bid on how many cruzieros we would pay per dollar for imported goods. ... I learned the maintenance of margins or replacement cost pricing, which is the only way you can make sufficient profit to buy and build more plants.
S E
In 1990 Oreffice reiterated the importance of this experience when he said:
Our chief financial officer is Cuban, our treasurer is Brazilian, the next man at the top is Italian, and after him comes a Chilean. Native-born Americans seem to have fallen behind in Trea-siny simply because of the wider experience that financial people from other countries have had all over the world.
That most Dow top executives have had considerable foreign experi-c ncc indicates that international operations are an integral part of Dow's total commitment. To bring about this commitment, Dow had to gain a dedication to international business from a broad spectrum of managers. The company estimates that the attitude change took about 20 years to
complete. Until 1954 only about 6 percent of Dow's business was abroad, and over 80 percent of that was from its one foreign subsidiary in Canada. The attitude in the late 1950s was expressed by a company historian as follows:
As for the overseas operations, a majority of the veterans regarded them as a sideline. The foreign market was all right as a place for getting rid of surplus products, but the only truly promising market was in the United States. They questioned the idea of the company becoming too deeply involved in countries whose politics, language, culture, monetary controls, and ways of doing business were strange to them.
Some of Dow's younger managers did not share this ethnocentric attitude, but dramatic steps were needed to convert the majority of managers to an international outlook. One method employed by the company's president in 1958 was to give international responsibilities to people who were widely perceived to be destined for top-level positions in the firm. C. B. Branch, who was managing Dow's fastest growing department, was appointed head of foreign operations. Herbert "Ted" Dow Doan, who at 31 was already a member of the board of directors, went to Europe on a factfinding mission. (Ted Doan's father and grandfather both had been Dow presidents.) Both Branch and Doan went on quickly to become presidents of Dow. Thus the importance of international operations became readily apparent to any manager in the company.
Although the discussion so far emphasizes the importance of international exposure for top-level managers in firms with global commitments, this experience is not the only international management consideration. Firms also must attract and retain high-quality personnel within each country where they operate. These are largely local personnel. To attract high-quality local personnel, Dow feels it must give people from all over the world the same opportunity to reach the top at Dow. Local needs also change as corporate strategies evolve. For instance, Dow had to hire many more non-U.S. scientists and technicians in the 1980s when the company was strengthening R&D in Europe and Asia.
Firms also must transfer people to foreign locations when qualified local managers are not readily available, or to infuse some technology to foreign subsidiaries. When Dow sends managers to foreign operations, what type of qualifications should they have? Robert Lundeen, a former Dow chairman who had served twelve years as president of the Pacific division and three years as president of the Latin American division, gave some indication of his philosophy. After speaking about the obvious technical needs, he said, ".When I worked in Asia, I observed that many Americans seemed to delight in their insularity and that attitude hurts the ability of the United States to do business in foreign countries."
For many years, Dow had difficulty in convincing people to take foreign assignments because of bad experience in repatriating them to acceptable positions. Dow has reacted to this problem in three ways: (1) sending some of its best people abroad so that "everybody will want them when they come back"; (2) assigning higher-level supervisors to serve as "godfathers" by looking after the transferred employees' home-career interests; and (3) providing each transferee with a letter guaranteeing a job at the same or higher level on return from the foreign assignment.
Because many managers have difficulty in adjusting to foreign locations, Dow holds a briefing session with each prospective transferee to explain transfer policies and to provide a briefing package compiled by personnel in the host country. This is followed by a meeting of the transferee and spouse with a recently repatriated employee or spouse to explain the emotional issues involved in the early stages of the move. The couple is also given the option of attending a two-week language and orientation program.
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