The emergence theories of charismatic and transformational leadership have formed our understanding of these topics in the past decade. While the terms charisma and transformational leadership have often been interchanged, Bass (1990) clarifies that charisma forms a part of transformational leadership.
Within Bass’s approach, transformational leadership includes charisma (providing a vision and a sense of mission and raising follower’s self-expectations), intellectual stimulations (assisting employees emphasize rational solutions and challenge old assumptions), and individualized consideration (developing employees and coaching). Furthermore, Bass (1990) emphasized that transformational leadership also goes beyond transactional leadership (or contingent reward such as the exchange of rewards for efforts) in elevating leaders and helping followers achieve higher levels of organizational functioning.
Hence with an increased level of interest in conceptual framework of transformational leadership, several studies have documented the benefits and importance of changing leadership styles. Koh et al. (1995) study show that there is a significant correlation between transformational leadership facets and organizational functioning. In fact, the study shows that subordinates’ satisfaction with their supervisors is associated with the extent which supervisors manifest transformational leadership.
In addition, several researches suggest the importance of transformational leadership as a precursor to some aspects of financial performance (Howell and Frost 1989, Howell and Avolio 1993). Ultimately, the significance of transformational leadership in an organization cannot be adequately understood without comprehending how changing leadership styles is both possible and likely to result in changes in subordinates’ perceptions, attitudes, or performance.
Barling et al.’s (1996) research suggests that an effective training program on developing transformational leadership at different organizational levels can increase an employee’s morale, commitment, and overall performance. Barling et al.’s (1996) study also extends prior researches (Kirkpatrick and Locke 1996, Howell and Frost 1989) suggesting that there is strong positive correlation between transformational leadership, commitment, and financial performance.
In line with this, the case of United Motors Company (UMC) suggests developing the company culture to better respond to the market needs. As such, one of the goals of H. Arthur Grommet was to develop and to hone leadership skills at different managerial levels. Because Mr. Grommet had inherited the most conservative and bureaucratic management in the industry, he organized a management traineeship program wherein management trainees were recruited from top business schools in the US, and selection from internal management to participate in the training program was also done.
The program, “LeaderMex” was then developed with the mission to identify, train, and monitor UMC’s managers who have strong performance records and the desire to work for their new subsidiary in Mexico. The high-profile program indicates that participants will assume positions with high responsibility and is a “fast-track” program in identifying potential leaders within the company. Individuals who qualify for the program are expatriated to Mexico and undergo rotations within at least two corporate divisions from three to five years. After which, the employees are promoted to higher positions after two years upon return to the US.
While the LeaderMex program is aimed at identifying internal leaders within the company, Human Resources has noted numerous problems that have faced by expatriate managers. At the start, there was no human relations program in place. Managers undergo a three day seminar on labor law and complete a language course before going to Mexico. However, as human relations realize that language alone is not a barrier, the organization recognized the need for a specific training on cultural awareness and the effect of cultural differences on employee attitudes and performance.
In response to the problems, a “cultural awareness” training program has been developed for managers prior to their relocation and assignment to Mexico. A series of trainings were developed for managers to understand how to work in different cultural environment and in how to handle human relations problems that may arise in the course of operations in Mexico.
Top management has recommended the following goals for the training program design: (1) introducing managers to the cultural differences between the United States and Mexico, (2) presenting some typical problems American managers face in that company as well as solutions to the problems, and (3) reducing the amount of time needed to adapt to managing in Mexico. Top management has assigned the Human Resources staff members, and possibly using the services of external consultant, in conducting the training program.
The value of the “cultural awareness” program in this case cannot be overemphasized. UMC’s move to set-up a subsidiary in Mexico only presents the increased internationalization and interpersonal cross-cultural contact within the company. In an effort to regain competitiveness in the global automotive industry, the need for UMC to develop the requisite skills in its employees to work within diverse cultures has become an important component in its strategy.
Moreover, as UMC has created the LeaderMex program to expatriate leaders in order to build and integrate the technology and culture of the new subsidiary, UMC must provide support functions for expatriate leaders in the new subsidiary. As such, a number of studies advocate cross-cultural training as a means of facilitating the expatriate’s ability to adjust to the new environment (Brislin 1981; Landis and Brislin 1983; Mendenhall and Oddou 1986; Tung, 1987).
The need for the support structures in training for the expatriate program can be seen in the cost of an expatriate assignment. According to the National Foreign Trade Council (NFTC) survey in 2002, a three year expatriate assignment for an employee with a $75,000 to $100,000 base salary costs an employer $1 million total.
Moreover, the cost of a poor staffing decision could range from $200,000 to $1.2 million (the figure only includes identifiable costs associated with compensation, training, development, etc.), and the rate of expatriate failures ranges from 10% to 45%. The cost of an expatriate assignment, therefore, demonstrates how measurement and evaluation of the assignments are crucial for companies. Ultimately, the lack of necessary preparation, HR assistance and appropriate support for repatriation is the culprit for expatriates’ failure.
In fact, the lack of understanding on the different dimensions of national culture in Mexico can lead to expatriates failures. Hostede (1993) identified the five dimensions of national culture as follows: (1) individualism-collectivism, (2) uncertainty avoidance, (3) masculinity-feminity, (4) power distance, and (5) time orientation. Awareness of these dimensions will help develop cross-cultural preparation programs that include meaningful information regarding the culture the expatriates will find themselves working in.
In addition, Minehan (2004) suggests that US expatriates in Mexico should understand cultural dimensions in four aspects. First, American assignees need a real understanding of the relationship between the two nations, Mexico and the U.S. In most cases Mexican colleagues will have a lot more knowledge of the U.S. than vice versa. Second, Americans are perceived to be arrogant and inflexible.
For Mexicans, relationships are paramount. People in Mexico obey people, not rules. In the US, people obey rules, not people. Third, language proficiency may not necessarily be a requirement in conducting business; nevertheless, proficiency in Spanish can help assignees forge and develop interpersonal relationships. Speaking the language goes a long way in helping the expatriate gain respect among colleagues. Fourth, crime rates is a serious issue in Mexico, and expatriates must be willing to adapt to whatever security measures are required to keep them safe. Understanding these key aspects of Mexico’s culture and history can go a long way in establishing good working relationships in the new environment.
While the content of the training program should highlight and assess the US expatriates understanding of Mexican culture and history, the training program should undergo different phases in the process. Noe (2002) suggest that the training program should have three phases: Phase 1 involves the pre-departure training, Phase 2 involves the on-site training, and Phase 3 is on the repatriation training.
The pre-departure training should involve employees learning the language and an orientation in the new country’s culture and customs. Noe (2002) suggest that the type of training most suitable would be language training, cultural awareness and sensitivity training, and daily living training. Language training can be conducted in a classroom type setting, videos, or an interactive learning through conversations.
Cultural awareness and sensitivity training aims to familiarize expatriates with cultural attitudes, communication styles, and cultural assumptions of the community. It also introduces the expatriates on the core cultural values, bias, and stereotypes that visitors need to be aware of. Daily living training includes providing expatriates with information about schools, housing, recreation and sports, shopping, transportation, utilities, banking, and health care facilities in the country.
The on-site training involves continued orientation to the host country and its customs and cultures through formal programs or through a mentoring relationship. The type of training suggested by the Bureau of National Affairs’ Human Resources Library includes continued language training, orientation, and mentoring. It is advisable that every employee sent overseas for training has a person who is responsible for well-being and is two levels above them in the corporation.
That person is tasked with ensuring that the offshore employee is kept in the loop and comes home periodically for meetings or just to hang out. In addition, the continued orientation to the host country through a mentor both for the expatriate and his/her family is a must during the adjustment process. It is important to maintain an active communication and provide company newsletters to expatriates as well.
The repatriation prepares employees for return to the home country. It aims to reduce stress level and anxiety when they return. It is important to continue mentoring in the process and to organize career planning discussions with the expatriate. Repatriation phase is important and valuable to the company as expatriates have been equip with a good understanding of the global marketplace having been immersed in the different market. Expatriates also bring a global vision to day-to-day company practices. More importantly, they can be crucial members of international task forces and if left “un-valued”, they can become significant assets to competitors.
The three phases are important in the overall training-program design and maximizing the return on investment of training-program. Nonetheless, it is important to note that while the LeaderMex program goal is to improve its market position by integrating the new subsidiary to UMC’s, the key of ensuring a sound global business is building a solid infrastructure with local talent. In the end, outstanding global organizations will hire the outstanding local people in every business around the world.
LeaderMex will ultimately play an important role in the initial stages of building a company in a foreign location, but in the long run, a qualified, well-trained group of local managers will be the key factor to success. And, the reason for the development local managers can be because of the high costs associated with sending parent country nationals to foreign country with a high failure rate. Other benefits of developing local talents include local manager’s knowledge of the local market and business practices, cultural preferences, and local connections (Hsieh and Lavoie 1999).
Barling, J, Weber, T, and Kelloway K. (1996). Effects of Transformational Leadership Training on Attitudinal and Financial Outcomes: a Field Experiment. Journal of Applied Psychology 81 (6): 827-832.
Bass, BM (1990). From transactional to transformational leadership: Learning to share the vision. Organizational Dynamics, 18(3): 19-36.
Bass, BM and Avolio, BJ (1990). Transformational leadership development: Manual for the multifactor leadership questionnaire. Palo Alto, CA: Consulting Psychologists Press.
The Bureau of National Affairs’Human Resources Library. (2000). Preparing Expatriates for Global Assignments.
Corporate Leadership Council (1999). Effective Repatriation Strategies.
Corporate Leadership Council (2001). Cultural Training for Expatriates.
Hofstede, G. (1993). Cultural Constraints in Management Theories. Academy of Management Executive, 7, 81-94.
Howell, JM and Frost PJ (1989). A laboratory study or charismatic leadership. Organizational Behavior and Human Decision Processes 43: 243-269.
Hsieh, T. and Lavoie, J. (1999). Think global, hire local. McKinsey Quarterly.
Joinson, C. (2002). Save thousands for expatriate. 47, 7.
Kirkpatrick, SA, and Locke EA (1996). Direct and indirect effects of three core charismatic leadership components on performance and attitudes. Journal of Applied Psychology 81:36-51.
Koh, WL, Steers, RM, and Terborg JR (1995). The effects of transformational leadership on teacher attitudes and student performance in Singapore. Journal of Organizational Behavior 16: 319-333.
Mercer, W.M. (2000). Expatriates Risk Management Survey.
Minehan, M. (2004). Prepping U.S. Employees for Mexican Success. SHRM Global Forum.
Noe, R.A. (2002). Employee Training and Development. New York, NY: McGraw Hill.
SwaakR.A. Expatriate Failures. Executive Placement International Human Resources.
Tarelli, E. (2003). How to Transfer Responsibilities to Local Nationals. SHRM Global Forum.
 Expatriate failure is defined as “employees who return home before completing their assignments”
 Individualism-collectivism describes the degree to which people act as individuals rather than as members of a group.
 Uncertainty avoidance refers to the degree to which people prefer structure rather than unstructured situations
 Masculinity-feminity refers to the extent to which the culture values behavior considered traditionally masculine (competitiveness) or feminine (helpfulness)
 Power distance refers to expectations for unequal distribution of power in a hierarchy
 Time orientation refers to the degree to which a culture focuses on the future rather than the past and present.
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