International: Opening Up an Overseas Operation
BY Donna Fenn
A CEO briefly explains how he hires local nationals as managers in international markets, and how he uses them.
To expand overseas, you must analyze foreign markets, size up your competition, and adapt your product or service to meet local needs. Fair enough. But Bruce McGaw, president of Bruce McGaw Graphics, a West Nyack, N.Y., fine-arts-poster publisher, knew that before he could do any of that, he needed the right person to run his overseas operation.
"As smart as I am about the American market, my knowledge doesn't necessarily apply abroad," admits McGaw. Rather than sending one of his U.S. employees to set up a London distributorship, he decided to search for a local manager to run his United Kingdom shop.
McGaw didn't want to "run over there every other week." So he invested his time up front, searching for "someone talented, who would take the ball and run with it." Candidates had to demonstrate the following:
1. Significant industry experience and real marketplace intelligence.
2. An understanding that customer service was central to the company's success.
3. The ability to take charge and run the business as if it were "his own little business."
McGaw found the perfect fit in a customer whose business was struggling. The fellow sold out to McGaw Graphics and signed on as its U.K. manager. Five years later European sales account for $3.5 million of total company revenues of $15 million, and the U.K. operation is considered a market leader. McGaw used a similar strategy in France, when he acquired a business run by an American. "Where you set up your business is not as important as finding the right person to run it," says McGaw. Although his strategic plan calls for expansion into Germany, Italy, and Spain, McGaw won't budge until he finds the right managers.
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Multinational Personnel Overseas staffing can be daunting. Robert Glass, senior vice-president at Robert Half International, which helps staff multinational operations in Europe, offers the following observations:
· A classic mistake is to staff foreign operations with U.S. personnel. As soon as possible, you should hire local nationals to work within the management ranks of your company.
· But mind the labor laws. Many countries have strict severance provisions that require employers to compensate certain terminated employees for three months or more. Hire temporary personnel and sign them on full-time after a probation period.
· Consider conducting background investigations. In most of Europe, it's easy to do a quick criminal check on potential hires at both the local and the national levels.
· Trust plays a huge role in any overseas employment relationship. To ensure that trust, give the local operator a minority ownership stake or a reward tied to performance.