By Neal Goodman, Ph.D.
Between 50 and 70 percent of international joint ventures (IJVs) fail, yet the number of IJVs, mergers, and acquisitions continues to increase. It is estimated that companies are making a combined investment of upward of $500 billion a year in these high-risk/high-reward ventures. What must not be overlooked is the role Training and Development can play in increasing the likelihood that these ventures will be more rewarding and less risky. Here is one current example:
A new international joint venture of four leading airlines from four nationalities, respectively, needed to rapidly get the managers from each airline to work effectively together. Each airline had its own processes, procedures, incentive practices, etc. The joint venture took the proactive step of delivering programs that helped team members better appreciate the cultural nuances of each of the airlines and the national cultures reflected in their management, decision-making, and communications styles.
The solution was an intensive two-day program, which brought representatives from each of the airlines together in each of the four countries. In the workshops, the participants learned about each other’s corporate and national cultures and were taught specific techniques to bridge the differences through simulations and scenarios. Though this program represented a significant investment in time for all participants and organizations, the ROI far outweighed the costs.
What Can Go Wrong
On the flip side, here are the common pitfalls of unsuccessful IJVs:
- Lack of cultural due diligence/poor partner selection.
- Ambiguous loyalty of expatriate managers in IJVs.
- The challenge of creating a global team of managers from all world regions.
- Lack of effective integration between partners.
- Change in strategic objectives.
- Unequal commitment/contribution by partners.
- Lack of trust.
- Feelings of isolation or “no voice” on the part of some parties.
- Unclear or misperceived goals and expectations.
- Poor selection of personnel.
- Conflict between parent company managers.
- Divergent national interests.
- Government changing the rules.
- Bad faith.
- Lack of clear leadership.
- Varying degrees of autonomy.
- Failure to adapt business practices to the local culture.
T&D Strategies for Successful IJVs
- Provide training for those involved in the selection of partners.
- Conduct corporate culture inventories between IJV partners.
- Conduct cultural and T&D due diligence.
- Provide cultural training for all parties and partners early in the process.
- Support open internal communication processes about the venture: rationale, people, processes.
- Develop teambuilding for integration strategies.
- Help to create a unique corporate culture embedded in processes, procedures, and business goals. Include timelines and milestones.
- Help examine if all parties’ policies and procedures contribute to the team’s productivity.
- Establish locally sensitive policies and practices for all locations.
- Develop a Global HR Planning and Development Program with clear links between international assignments and career planning.
- Outsource for best international services.
- Create Global Rotational Programs to integrate local country managers into the broader corporate culture.
- Keep on learning. If an IJV fails, conduct an autopsy to find out why and learn from mistakes.
- Share information across the business, especially with overseas personnel.
If more IJVs and M&As would implement even a few of these recommendations, their success rate surely would increase.
If you would like more details on the role T&D can play in the success of IJVs or have case studies or best practices to share, please write me at ngoodman@global-dynamics.com.
Neal Goodman, Ph.D., is president of Global Dynamics, Inc., a training and development firm specializing in globalization, cultural intelligence, effective virtual workplaces, and diversity and inclusion. He can be reached at 305.682.7883 and at ngoodman@global-dynamics.com. For more information, visit http://www.global-dynamics.com.
