Making effective cross-border teams
In an increasingly multi-cultural business environment, one needs to create effective global business teams to make mergers and acquisitions work
Case: Merger of Arcelor and Mittal Steel ( 2006 ) creating world's first truly global steel company with operations in four continents.
An immediate effect of the merger was to give the combined company
- Greater resources
- Larger market share
- More production facilities
- Wider footprint
- More research and development centres
- More distribution outlets.
However, none of these opportunities to create value can be realized without establishing dozens of global business teams (GBTs).
- Cross-border teams of individuals of different nationalities, working in different cultures, possibly in different businesses and across different functions
- The individuals come together to coordinate some aspect of the multinational operations on a global basis.
- Can be given different names:
- Global management committees
- World business boards
- Global product councils
- Global launch teams
- Global quality task forces
- Global supply chain teams
- Global purchasing forums
- Global strategy teams
- Central role: Coordinating and integrating mechanisms
Global business teams also present certain major challenges as compared to business teams in general:
- Constituent individuals are separated not just by geographic distance but also by cultural and linguistic differences.
- Communication barriers exist.
- Developing mutual trust is difficult.
- Overcoming communication barriers among team members can be much more challenging in GBTs as compared with business teams in general.
The performance of any global business team is a function of correct choices and decisions in three areas:
- Team charter :
- Team composition
- Team process.
3 key questions to address:
- Is the charter defined correctly?
- Is the charter framed correctly?
- Is the charter clearly understood?
Consider, for example, a cross-border R&D team set up by a globalizing auto company. Depending on the specifics of the brand and product portfolio, one could imagine radically different charters for such a team:
- Consolidate all R&D into one location
- Create differentiated centres of excellence in three locations, or
- Do not interfere in the existing R&D centres but create mechanisms such that each centre can learn from the others.
These are very different team charters.
- A team whose charter is "mis-defined" is doomed from the start.
- It should be framed in such a manner that team members always have clarity about how achieving the goals will make the company's products and services more attractive to its customers and stronger vis-à-vis competitors.
- Even in non-zero-sum situations (as is the case with most GBTs), there will always be tensions between the priorities of different units. Framing the charter in terms of external wins makes it easier for GBT members to deal with these tensions more constructively.
- The team charter must be communicated repeatedly to the team members and to others in the broader corporate eco-system. Given geographic, cultural, and linguistic distance, there is always a risk that people may forget the original reasons why the team was created in the first place.
There are five requirements relating to team composition:
- In order to get the job done, the team must include people who possess information critical to the team's task as well as those who will play a critical role in implementing the recommendations.
- If at all possible, the team should include at least some people who have worked with each other in the past and who have experience in working across cultures. Prior collaborative experience on the part of some team members can help to minimize the emergence of trust and communication problems.
- The team size should be manageable, that is, ideally not more than 10-12 people per team. If the team needs to be larger, it may be useful to consider the creation of a smaller core team and a broader extended team.
- The team should be led by an individual who has the substantive skills and power to help drive concrete decisions and recommendations as well as the social skills to minimize emotional conflicts. If the team leader is not skillful at doing both tasks, then he/she should consider appointing an associate team leader with complementary skills.
- The team must be in a position to have a widely recognized senior-level political sponsor who can hold the team accountable to deliver on its assigned task as well as "run interference" on behalf of the team vis-à-vis the rest of the organization.
The three key elements of team process are:
- Ensuring goal alignment
- Reducing communication barriers
- Building trust
1. Goal alignment problems: Can be minimized by ensuring that there is a strong linkage between team performance and the rewards and/or recognition earned by team members.
2. Communications problems : Can be reduced by:
- Investment in language and cross-cultural training
- Use of high-fidelity communications technologies (such as high-quality video conferencing rather than just email)
- Prior agreement regarding norms of communication
- A bias for data-driven decisions
- Analysis of multiple alternatives (to prevent pre-mature closure towards one side's recommendations)
- Rotation of the meeting location to the sites of various team members.
3. Cultivating trust: Trust can be cultivated among geographically dispersed team members by:
- Development of greater inter-personal familiarity and social bonds
- Respect for local times and holidays
- Explicit norm that people should say what they mean and mean what they say.
- It is inevitable that cross-border business teams will have to rely heavily on technology-mediated virtual communication. However, research has confirmed that virtual interaction flows more smoothly when the team members also meet with each other in face-to-face contexts and develop social bonds that go beyond mere official roles.
It is clear that global business teams are emerging as the single most powerful and ubiquitous tool for integrating the global enterprise. However, despite their criticality, they also present major challenges. As discussed above, systematic design and management of GBTs can go a long way towards increasing the odds of success.
- Contributed by Vaibhav Agarwal