The purpose of this activity is to identify, recruit, train and deploy potential personnel for key managerial positions in OYM IT, a joint-venture undertaking between FIRST UP IT of Australia and IT SOLUTIONS of India. The time table for the identification, recruitment and training of management personnel for the Joint Venture post is three calendar months.
The selected management personnel will report to the Joint Venture Chief Executive Officer, Mr. (Indian National). Mr. (Indian National) worked extensively with IT SOLUTIONS in a high-ranking executive position and as such, has extensive experience in IT operations. He will be leading the business operations of the joint venture company in China, including the human resource aspect of the business. As such, the joint venture company Chief Executive Officer (CEO), should be supported by capable management personnel that will be hired either from within the two participating companies, FIRST UP IT of Australia, IT SOLUTIONS of India, outsourced from other companies in Australia or India or hired directly in China. The selected management personnel will be responsible for the following key tasks:
Managing the host country national (HNC) staff, including the personnel for
First line managerial (supervisory) positions
Production and design positions
Sales and marketing positions
The management personnel identified and selected shall be deployed to China for a period of two to three years. Suitable re-entry program back into their respective country of origin shall be implemented upon the employees return.
Rationale of Proposed Activity
The India and Australia Joint Free Trade Agreement (FTA) Feasibility Study (2010) stated that there is a remarkable growth in the trading relationship between the two countries, stating further that the economies of both countries are “complementary”. From 2005 to 2009, the bilateral trade between India and Australia has increased by 24% per annum, valued at about US$ 16 billion while two-way investments, is estimated to be about US$ 1.5 billion. Two-way investments are defined as direct and indirect investments in trade or services between the two countries.
The Joint Venture (JV) Agreement between the two corporations participating in the joint venture, FIRST UP IT of Australia and IT SOLUTIONS of India exemplifies the prospering commercial relationship between Indian and Australian firms. The Joint Venture Company is envisioned to compete and operate in China, the fastest growing economy of the world and a prime market for the proposed products and services of the joint-venture company OYM IT. Entering the market without sufficient knowledge, competitive advantage or significant and specialized expertise will be difficult for any aspirant company, especially those that have no prior experience working in any country such as the start-up OYM IT (Startup Overseas, 2012).
A Joint Venture is a full alliance between two commercial entities, in this case, Australia’s FIRST UP IT and India’s IT SOLUTIONS. The Joint Venture Company will have its own structure and identity, different from the participating partners. The Joint Venture Company is projected to produce better outcomes than what either FIRST UP IT or IT SOLUTIONS would achieve if and when they enter the Chinese market individually. The purposes of the Joint Venture Company are the following:
Minimize the risk of entry of either FIRST UP IT of Australia or IT SOLUTIONS of India into the Chinese market;
Pursue complementary interest and objectives of the participating partners, in this case the development of the market for the participating partners goods and services;
Achieve the minimum economic size and operating efficiency required for competing in the highly competitive Chinese market; and
Capitalize on the identified investment opportunity for the Joint Venture Company.
The ability of the JV Company to compete in China will rest solely on the shoulders of its key management personnel. OYM IT is foreseen to have a multi-cultural management roster because the skills required for key management positions necessitate that the candidates installed therein have wider and better global appreciation of their responsibilities and tasks. This means that the management employees will come from different parts of the world and from different organizations, to contribute and differentiate the corporate identity of the Joint Venture Company from its parent companies. This approach veers away from the ethnocentric approach of both participating partners, meaning that only locals are identified, appointed, trained and ultimately deployed as managers within their countries of origin. In a foreign host country such as China, having a multi-cultural roster ensures that extensive knowledge of host country conditions are identified and utilized, that locally hired personnel become more committed to the organization, and that the host country government could be tapped for support is crucial for success.
The Joint Venture Company shall follow an Operator Model for general management and operations. In this model, the organizational structure and the reporting lines will be clearly defined. Organizational culture shall also be very different from any of the participating partner’s organizational culture, hence the need for responsive and receptive management personnel, and a due diligence on the skills required for management personnel shall be conducted to ensure successful deployment in China and the long-term viability of the Joint Venture Company. This due diligence process is encapsulated in the steps outlined below.
Currently, both participating partners have candidates for the position. A tentative organizational chart is presented below showing the organizational structure given these prospects. The chart shows that the Chief Executive Officer (CEO) of the company will be an Indian national representing IT SOLUTIONS and directly under the CEO are four (4) management executives. Two management executives will be of Australian nationality, both coming from FIRST UP IT. Two other management executives will be hired, trained and then folded-into the management structure of the Joint Venture Company. Below these management executives are personnel hired from China.
The prospective management personnel are characterized as follows:
Chief Executive Offer – Indian National and Head of Party. The CEO is of substantial experience in operations and will be representing the company IT SOLUTIONS of India in the Joint Venture.
Executive 1 and 2 – Australian Nationals. These executives are already identified by FIRST UP IT of Australia. The suitability of these candidates for the management position shall be evaluated using the selection criteria outlined in the succeeding sections of this proposal.
Executive 3 - the nationality of this management personnel could be Australian, Indian or Host Country (Chinese). This executive is foreseen to be hired in Australia or India either from within the participating partner’s organization or externally. The advantage of hiring this personnel is that it builds on the cultural capabilities of the participating partners, it makes training the prospective candidate easier because orientation into company functions can be completed while in Australia or India, and the deployment into China will provide the prospective candidate the new organizational culture that is required to improve the probability of international success.
Executive 4 – Host Country National. This executive shall be hired in the Host Country as the first employee of the JV Company. The advantage of this strategic move is to ensure that there is sufficient local knowledge and business capabilities built into the JV Company for immediate operation.
Conducting the selection activity for management personnel is an important first step in the formation of the Joint Venture Company. The benefits of conducting the employee selection activity simply outweigh the cost of the entire selection, training and deployment process. According to the website Street Directory.com (2012), an estimated 20-50% of personnel deployed abroad return prematurely, with associated costs ranging from US$ 55,000 to 150,000 per returnee. The deployed personnel return as failures due to the inability to adapt of working and living conditions overseas or due to the stress caused by important but non-work factors. The cost of management employee selection coupled with cross-cultural training will be below the cost range stated above. The potential upside of proper employee selection process is tremendous, with respect to this cost and the business potential of the Joint Venture Company.
The selection of personnel for overseas deployment will be a four-step process. These steps are summarized in the report Managing Transitions and International Deployment (2008) as:
Personnel and Work Orientation/Training
Personnel On-site Monitoring and Support
Personnel Re-entry program into Country of Origin
Identifying the desirable traits and characteristics of management personnel for deployment to overseas destinations is an important component of the Employee Assessment step. The purpose of determining the appropriate selection criteria for management personnel for the Joint Venture Company are as follows:
The ideal management candidate for deployment oversees must be selected based on the following key competencies:
Technical ability – this refers to the competency of the prospective personnel in specific areas of responsibility
Cultural Empathy – according to Wikianswers (2012), this refers to the employee’s awareness of and understanding of China’s culture, characteristics, values and beliefs, which are all needed for conducting business in China
Adaptability and Flexibility – this refers to the ability to manage business and socio-economic changes and to develop strategies to benefit from the changes encountered
Diplomatic Ability – according to Reference.com (2012) this refers to the capacity of the management personnel to represent the interest of his organization in negotiations and the capability of that person to interact with numerous counter-parties in China
Language Aptitude –according to the British Council (2012), this is the capacity of the management personnel to learn, understand and adapt the Chinese languages and then have the capability to utilize the learned languages effectively in business situations
Personal Motives – this refers to the personal motivations of the prospective hire such as career advancement, new challenges, etc.
Emotional Stability and Maturity – this refers to the level of emotional stability of the prospective hire. Emotional stability and maturity are both required since the deployment will uproot the management personnel and re-establish his living and working environment in an alien location, in this case China
Adaptability of Family – this is an external factor, if the prospective hire is married and with children, the capability of the family to adapt to the new living conditions offered in China will be crucial in determining the success of the management personnel
The website Street Directory.com (2012) states that cross-cultural training is an important step in the entire process. The Joint Venture Company will benefit immensely from employing local personnel. Therefore, understanding the way these potential hires is essential. The effectiveness of being able to understand the local market in a language that is comfortable to expatriates and local hires cannot be stressed enough.
Cross-cultural training prepares the prospective management personnel for the difference in socio-economic and cultural conditions of the Host Country. It enables them to work effectively, if not harmoniously with host country hires. It saves these management personnel time in that the difficulties of adapting to the new culture are curtailed and more time is devoted to the implementation of corporate strategies and tactics.
The lack of cross-cultural training is a serious problem for the Joint Venture Company. For example, differences as simple as the different interpretation of words can lead to ineffectiveness and opportunity loss. Issues bigger than a difference in semantics, would cause more severe problems that may impede the Joint Venture Company’s operations, sustainability, growth and overall profitability.
In general, the cross-cultural training program shall be designed with the following key aspects.
Adequate time for program engagement
Appropriate cost-to-training ratio
Focus on the selection and employment of local (host country) nationals
Reporting to top management
The timetable for employee selection, cross-cultural training, monitoring and re-entry shall generally follow the schematic time table shown below (see attached spreadsheet).
The deployment of managers to new destinations abroad requires the considerable evaluation of many factors. These factors are critical in improving the probability of commercial success. For the Joint Venture Company OMY IT, it is imperative that the four-stage process for successful deployment of personnel is conducted.
The process begins with selection and followed up by intensive training and development, with the entire first two-steps of the process conducted in three months (12 weeks). Once completed, the selected personnel will be prepared for international deployment.
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India and Australia Joint Free Trade Agreement (FTA) Feasibility Study. 2010. Commissioned by the Ministry of Commerce and Industry, Government of India and the Department of Foreign Affairs and Trade, Australian Government. Retrieved from http://www.commerce.nic.in/publications/Final_JSG_Report_as_printed_and_released_4thMay_2010.pdf?id=18 Retrieved on October 2, 2012
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Wikianswers. 2012. Cultural Empathy. Retrieved from http://wiki.answers.com/Q/What_is_cultural_empathy Retrieved on October 2, 2012