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News & Events
Growing In A Globalized World
Monday, October 09, 2006
Robert E. Kennedy is a professor at the Michigan Business School, University of Michigan. He is also the Executive Director at The William Davidson Institute. He is currently working on a book on the re-organization of the global workforce. Professor Kennedy in conversation with Global Services' Executive Editor-Online Shyamanuja Das
No. Globalization of services feels different than traditional services largely because it is occurring in sectors that have never seen much trade. But the basic ideas are derived from the rules of trade that still apply. It makes American companies more efficient. When countries trade with each other, in almost all cases, both sides come out better. But, there is one caveat. It creates a lot of turmoil. The U.S.A. as a whole gains, though there are individual people who get displaced. But it is important to remember that in the U.S.A., total compensation growth is still pretty good and the unemployment rate is very low — 4.3% last year. The 30-year average is close to seven percent.
What is the difference between managing a traditional and global workforce?
On the one hand, good HR practices transfer fairly well. This includes things like having clear job responsibilities and deliverables, recruiting high quality, flexible people and giving honest and effective feedback. Firms like GE, Motorola or British Airways don’t fundamentally change their processes when they go global.
On the other hand, managing a global, networked workforce usually means putting people outside their comfort zone. Few people enter management with a high comfort level in cross-cultural situations. You have to get used to local customs, ways of interacting, giving feedback, etc. Also, the number of remote managerial relationships is exploding. In a traditional firm, the business-unit head, operating manager and line workers are all in the same geographic area, and can get together if needed. With the new, networked organizations, you might have a unit head in Tokyo, a middle manager in Delhi, and the line workers in Jakarta. The modes of communication, deliverables and friction management are all much more formalized in this environment. That obviously leads to managerial challenges.
Pakistan, Bangladesh, Nigeria, Ethiopia, Congo ... will have large working-age population in the next few decades. Yet, they remain mostly jobless today.
I agree. That is a big geopolitical issue. The world will be a better place if someone could figure out how to bring jobs to these places. But that someone does not exist. There is no world government. The UN is not effective. The organizations that have the ability to bring jobs are not going to do it because they are not focusing on world welfare. World bodies like the World Bank and UNDP may give recommendations, but ultimately it is the countries themselves that have to act.
Can you tell us about your new book?
The book is called the Global Reorganization of Work (GROW). It is aimed at helping a managerial audience figure out how to think about offshoring/outsourcing. We talk about why this is happening now, best practices for process migration and re-engineering, and how it affects strategy in the new global economy.
We have been pleasantly surprised at how cooperative firms have been. Smart, leading-edge firms are working to understand the possibilities that offshoring opens up, and how they can incorporate these into their strategy. The firms that are ahead of the curve are realizing large returns on their effort/investment. The defensive ones are going to really find themselves behind the eight ball.
Is globalization of services a zero-sum game?
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