Challenges Faced By Managerial Functions

Functions of the Global Manager

Global competition has forced businesses to change how they manage at home and abroad. The increasing rate of change, technological advances, shorter product life cycles, and high-speed communications are all factors that contribute to these changes. The new management approach focuses on establishing a new communication system that features a high level of employee involvement. Organizational structures must also be flexible enough to change with changing market conditions. Ongoing staff development programs and design-control procedures, which are understandable and acceptable, are outcomes from this new approach. Management values are changing, and managers must now have a vision and be able to communicate the vision to everyone in the firm. Although the international manager performs the same basic functions as the domestic manager, he must adjust to more variables and environments. Therefore, each of the five basic management functions must change when operating in a foreign market.

Planning
The first stage of international planning is to decide how to do business globally: whether to export, to enter into licensing agreements or joint ventures, or to operate as a multinational corporation with facilities in a foreign country. To develop forecasts, goals, and plans for international activities, the manager must monitor environments very closely. Key factors include political instability, currency instability, and competition from governments, pressures from governments, patent and trademark protection, and intense competition. International firms should be sure that their plans fit the culture of the host country. Typically, U.S. firms feel that long-term plans should be three to five years in length; but in some cultures, this time period is too short. Many countries must plan with the assistance of governmental agencies. And working through bureaucratic structures, policies, and procedures is often time-consuming.

Organizing

International businesses must be organized so that they can adapt to cultural and environmental differences. No longer can organizations just put carbon copies or clones of themselves in foreign countries. An international firm must be organized so that it can be responsive to foreign customers, employees, and suppliers. An entire firm may even be organized as one giant worldwide company that has several divisions. Above all, the new organization must establish a very open communication system where problems, ideas, and grievances can quickly be heard and addressed at all levels of management. Without this, employees will not get involved, and their insights and ideas are crucial to the success of the business. As an organization extends its operations internationally, it needs to adapt its structure. When the organization increases its international focus, it goes through the following three phases of structural change: 1. Pre-international stage. Companies with a product or service that incorporates the latest technology, is unique, or is superior may consider themselves ready for the international arena. The first strategy used to introduce a product to a foreign market is to find a way to export the product. At this phase, the firm adds an export manager as part of the marketing department and finds foreign partners. 2. International division stage. Pressure may mount through the enforcement of host country laws, trade restrictions, and competition, placing a company at a cost disadvantage. When a company decides to defend and expand its foreign market position by establishing marketing or production operations in one or more host countries, it establishes a separate international division. In turn, foreign operations begin, and a vice president, reporting directly to the president or CEO, oversees the operations. 3. Global structure stage. A company is ready to move away from an international division phase when it meets the following criteria: The international market is as important to the company as the domestic market. Senior officials in the company possess both foreign and domestic experience.

International sales represent 25 to 35 percent of total sales.

The technology used in the domestic division has far outstripped that of the international division. As foreign operations become more important to the bottom line, decision making becomes more centralized at corporate headquarters. A functional product group, geographic approach, or a combination of these approaches should be adopted. The firm unifies international activities with worldwide decisions at world headquarters.

Staffing
Because obtaining a good staff is so critical to the success of any business, the hiring and development of employees must be done very carefully. Management must be familiar with the country's national labor laws. Next, it must decide how many managers and personnel to hire from the local labor force and whether to transfer home-based personnel. For example, U.S. firms are better off hiring local talent and using only a few key expatriates in most cases, because the costs of assigning U.S.based employees to positions overseas can be quite expensive. Simply, expatriates (people who live and work in another country) are expensive propositions even when things go well. Adding up all the extrashigher pay, airfare for family members, moving expenses, housing allowances, education benefits for the kids, company car, taxes, and home leavemeans that the first year abroad often costs the multinational company many times the expatriate's base salary. The total bill for an average overseas stay of four years can easily top $1 million per expatriate. In any case, managers need to closely examine how to select and prepare expatriates.

Directing

Cultural differences make the directing function more difficult for the international manager. Employee attitudes toward work and problem solving differ by country. Language barriers also create communication difficulties. To minimize problems arising from cultural differences, organizations are training managers in crosscultural management. Cross-cultural management trains managers to interact with several cultures and to value diversity. In addition, the style of leadership that is acceptable to employees varies from nation to nation. In countries like France and Germany, informal relations with employees are discouraged. In Sweden and Japan, however, informal relations with employees are strongly encouraged, and a very participative leadership style is used. Incentive systems also vary tremendously. The type of incentives used in the U.S. may not work in Europe or Japan, where stable employment and benefits are more important than bonuses.

Controlling
Geographic dispersion and distance, language barriers, and legal restrictions complicate the controlling function. Meetings, reporting, and inspections are typically part of the international control system. Controlling poses special challenges if a company engages in multinational business because of the far-flung scope of operations and the differing influences of diverse environments. Controlling operations is nonetheless a crucial function for multinational managers. In many countries, bonuses, pensions, holidays, and vacation days are legally mandated and considered by many employees as rights. Particularly powerful unions exist in many parts of the world, and their demands restrict managers' freedom to operate.

Major Challenges & Solutions

The Responsibility vs. Authority Trap

Firmly embedded in management folklore is this one: the responsibility youve been given is not commensurate with the authority (or formal power) you believe you need to accomplish the mission. The size of the gap between responsibility and authority will partially depend upon the structure of your organization. If youre in a purely functional organization and in many cases, a matrix organization you should not expect to be granted very much formal authority. The gap between responsibility and authority will be quite wide. To compensate for your perceived lack of formal authority, youll have to rely upon expert power (respect you can garner through superior knowledge or capability) or referent power (often accessed by practicing an excellent leadership style). Youll also need to rely heavily upon your ability to influence and persuade.

Imposition of Unrealistic Targets

Sound management practice suggests that project goals (cost, schedule, quality, and functionality) should be determined through a systematic process of understanding customer needs, identifying the best solution, and formal planning. Throughout this process, realistic assumptions about resource availability, quality of materials, and work process (just to name a few factors) should be used. This approach yields a credible estimation of what is reasonably achievable. If this estimation does not meet business goals, then a systematic risk-vs.-return process should be pursued until it can be verified whether or not the targets can be met within a given level of elevated risk. Thats the process that should be followed. Unfortunately, we live in a real world. Targets are far too often based on desire or a vague sense of what should be achievable, rather than driven by calculated business needs. In even more unfortunate circumstances, targets are developed

before its even known what the project entails! In either case, the result is that impatience rather than a rational process drives the selection of the targets. From that point on, a desperate struggle begins, as the team tries to force the project to fit within the boundaries that have been drawn. This practice puts Managers in a very difficult position, as it often sets them up for certain failure and severely undermines the planning process. Unfortunately, this phenomenon seems to have reached epidemic proportion: its one of the biggest complaints of practicing Managers today.

Perpetual Emphasis on Function

If youre managing a project in a functionally oriented organization, one of the more difficult challenges that youll face is getting team members to overcome their inherent tendency to think and act in terms of optimizing their own discipline, technical field, or department. Its important to recognize that this phenomenon is fueled by three powerful influences. First, by definition, projects are temporary, but functions live on. In other words, a person often considers his or her work group to be home; the project is just a passing state of existence. Second, unless contemplating a formal career change to project management, a person considers his or her discipline or area of expertise as the work focus. This means that her or she will likely be committed to ensuring the well-being of that area. This strong loyalty could, for example, give rise to counterproductive situations, such as team members using your project funds to advance their discipline perhaps in excess of what customer requirements dictate. Finally, theres the power of the paycheck. Simply stated, most people tend to pledge allegiance to the source of their paycheck. For most people in most organizations, thats their work group or functional department, not you.

The Dual Responsibility Trap

Most Managers are asked to wear two hats. They must perform their job duties while acting as the Management. This situation may present additional challenges for you. At the center of this dilemma is the issue of allegiance. Imagine for a moment that youre facing a critical decision. Unfortunately, whats best for the project will negatively impact your work group but what benefits your work group will hurt your project? Whats the right decision? What do you do? If you make the decision that benefits your work group, you risk being viewed as a poor Manager. If you choose the course of action that benefits the project, you may incur the wrath of your peers and/or departmental management. Its a tough spot and you can almost bank on being in it, possibly often. A more fundamental problem of the dual responsibility trap is figuring out how to divide your time and attention between the two roles. How much should you allocate to each? How long can you try to satisfy both before you realize youre working most nights and weekends? Finally, a third issue often surfaces in the form of the two boss syndrome. The Management reports to his or her functional supervisor and to the person who manages the project management function in the organization. Again, this is a difficult situation for most Managers.

The Fundamental Conflict of Certainty and Uncertainty

Many misunderstandings and disconnects between Managers and organizational management can be traced to the fundamental conflict between the certainty that

management requires to properly run the business and the inherent uncertainty of project work. Cost and schedule estimating provides us with an excellent example. Suppose youre just beginning a project. Its likely that you have limited information on this project and theres a significant degree of uncertainty. In a situation such as this, project management practice suggests that you would be well advised to use ranges of values when providing estimates on cost and schedule. The size of your range would reflect a level of accuracy consistent with the extent of your knowledge and the amount of uncertainty. In our example, it would be perfectly appropriate for you to estimate that the cost of your project will be somewhere in the range of $400,000 to $550,000. Unfortunately, many Managers today would receive a very unfavorable response from their organizational management to that type of crude estimate. It doesnt provide the certainty that management requires for approval. Unfortunately, this example is not exceptional. The uncertainty associated with projects exists throughout the life of the project: it simply never goes awaynor does managements craving for certainty.