Going Global: Not Just for Big Companies Anymore. Could Yours Be Next?

International business practices aren’t an issue for only huge companies anymore—smaller companies are now increasingly reaching foreign shores.

What do you need to know about the changing landscape in international business and how it affects compensation and attracting top talent?

Some Issues Are Universal … But Many Are Not.

Jacque Vilet, president of international consulting firm Vilet International, understands how to take the show on the road, so to speak. With more than 20 years of consulting in the areas of human resources and compensation behind her, she’s intimately familiar with effective ways to open and operate a company outside the borders of the United States..

Sometimes, she says, the issues that need to be addressed are the same here as they are anywhere else. More often, though, each locale has its own unique set of challenges.

BLR^® spoke with Vilet recently about the changing landscape in international business—including how it affects compensation philosophy and strategy.

If yours is a small- or mid-sized company, you may think you’ve reached the point in the article where you can stop reading. We advise that you keep going; Vilet says part of the change is that smaller companies are now increasingly reaching foreign shores.

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BLR: So international business practices aren’t an issue for only huge companies anymore?

Vilet: No. There is a little company of 20 employees that’s about 10 miles from me. Of the 20 worldwide employees, nine are overseas. And these are not Americans working overseas; these are local people working in their own country—Japanese people in Japan, French people in France. So if you think of only the big companies globalizing, you’re wrong. Now, it’s the small companies, too.

BLR: When a company begins operating in another country, what do they need to learn?

Vilet: It’s not just whether you bow or shake hands when you meet someone. It’s actually the cultural aspect of how you do business. As Westerners, especially Americans, we often have this idea that the way we do things is the correct way. It’s not arrogance, it’s just assumed. There are many concepts that have been developed in the Western world that we accept as fact, but when you go overseas, people may not have even heard about them.

Pay for performance is an example. Sometimes they don’t understand why you would pay for individual performance, because for them, performance is more of a group thing. That’s just their philosophy.

In the United States, we hold individuals responsible for their goals, but in some countries, the belief is that no individual can excel without the support of other people. It’s a group effort. So even if you’re a salesperson, everybody is a part of how you achieve your quota. They prefer to see pay for performance based on team accomplishments.

Another area is performance appraisals. Managers in some Asian and Middle Eastern countries have difficulty sitting down with employees and giving them feedback. Talking about weaknesses is very uncomfortable because there’s this whole element of face saving.

You may have to have a performance appraisal system implemented globally because top management feels very strongly about it. If that’s the case, you need to come up with a way to implement it gradually with a lot of training to educate managers on how to do it.

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BLR: You’ve talked about the necessity of using data to make decisions and pointed out that the data also need to be carefully examined to determine what is important and what isn’t. When you’re discussing compensation in other lands, how does this apply?

Vilet: Let me give you an example. Compensation is sometimes thought of in terms of making sure pay is competitive in a given country. It’s more complicated than that.

If your company’s business strategy, for example, is to focus on sales in Indonesia because it is an emerging market, compensation of the salespeople in Indonesia may need to be higher than market. You may decide to pay the sales positions at the 75th percentile and everyone else in the 50th percentile. That’s why compensation is more than just being competitive. It’s also about business strategy.

BLR: That’s what compensation people in the United States need to think about, too. What’s different about it overseas?

Vilet: You know we’re in a war for talent here in the United States. Other countries are having the same problem. All companies, whether they are American or French or Chinese, are running into that problem worldwide. So the goal is to try to figure out what is going to attract people, and it’s not going to be the same necessarily.

One size does not fit all; you can’t just take your U.S. compensation program and overlay it on another country. Globalization requires that we take a closer, individualized look. That’s why I say you have to understand what’s going to appeal to people in each country—Bulgaria versus France versus the United States, for example.

Tomorrow: Vilet’s thoughts on generational differences in the workplace and advice for opening an overseas location plus an introduction to Compensation.BLR.com, the one stop destination for all of your compensation needs!