CHAPTER 5
The Economics of Training International Managers

These are some of the issues involved in considering alternative locations for training international managers, and location is just one issue where there are costs and benefits. In this chapter we will examine the main costs and benefits of training international managers in a group.

Benefits of training managers from different cultures as a group

As already discussed in Chapter 3, it is widely understood that where managers need to work in teams with colleagues from other cultures there are enormous advantages in them attending training sessions together. This helps to get first-hand experience of interacting with colleagues who will work in a particular and different way purely because it is the norm for their country of origin. It is extremely difficult to say what is the value, in financial terms, of an enhanced understanding of the different approach of colleagues. Most managers would, however, agree that projects can easily be delayed and sub-optimal solutions produced if managers from different cultures are asked to work together, without any attempt being made to give them an understanding of cultural differences and how they affect ways of working. This is especially the case if the team-leader is not experienced in managing a multi-cultural team. The experience does not necessarily have to be gained through training, but this is usually faster than a series of working secondments in nine or ten countries.

A more easily identifiable payoff is one where the training is specifically aimed at developing managers to understand unfamiliar cultures prior to taking management responsibilities that will involve them managing people within these cultures. The fact that it will cost three times as much to use an expatriate manager from Europe in another European country, five times as much to introduce a manager from Latin America and 30 times as much to transfer a European to China as it would to use local managers is evidence enough that training which is effective in sensitizing managers to unfamiliar cultures will enable companies to see a handsome return on their training investment.

Attempts have been made to train managers in their own country in the customs of people from different cultures, and some knowledge can be gained from this type of training. However, as discussed earlier in this book, for this knowledge to be turned into sufficient understanding to enable managers from different cultures to work effectively together it really does require that they interact face to face as a group, while undertaking some type of problem-solving, case study or business simulation activity.

Within a large multi-national company there is also the benefit of forming a network of colleagues in different countries, which can be achieved very effectively at residential training events. This can be extremely effective in integrating the process of management across national boundaries and moving all parts of the organization in the same direction at the same time. This is even the case where there are integrated systems and business processes that have been developed to integrate the strategic and operational management of the company. Again it is difficult to convert the benefit of effective management integration into financial terms, but the costs of fragmentation and inconsistency can be seen in terms of delays and ineffective service to customers.

One of the major driving forces towards integrated management of large businesses across the world has been customer pressure to supply products and services consistently in all geographic regions. Take the example of a capital goods supplier to the motor industry. This supplier is not only expected to negotiate worldwide supply contracts centrally in Detroit or in Stuttgart, but is expected to deliver a consistent service in countries as far apart as the USA, the UK, Mexico and the Czech Republic. The degree of co-ordination required to do this can only be achieved by managers who are fully conversant with approaches that work in all the countries where they have operations and also where their customers need the products and services to be delivered. The benefit of training and developing managers to achieve this is the ability to compete with other companies who are achieving it now. The price of second-rate service due to lack of co-ordination is failure to compete and ultimately business failure.

For organizations that are truly global, English is normally the common language. Where the company is determined to run totally integrated operations it is now usual for managers, who will be expected to interact with colleagues in other countries, to have a working knowledge of English. Language facility increases only with usage and so a byproduct of training held in English is increased fluency in the language. This will have a benefit outside the training room, in the everyday management of the company's operations. Again it is difficult to evaluate this benefit financially, but mistakes made due to the inability to communicate effectively can be extremely expensive.

Another benefit of taking managers away from their home country for training is that it presents the opportunity to visit the company's operations in the country where the training takes place, thus exposing managers to a different environment and some new practices that could be of value in their home country. Likewise, it may be possible to visit

customers in the training location and appreciate how business is developing in another part of the world.

Costs of training managers from different countries as a group

Clearly the unavoidable additional cost, when compared with training managers in their home country near to their workplace, is that of travel to the chosen location. Travel also involves time, so there is potentially an opportunity cost too. However, if we are looking at a region like Europe, where the distances are not too great and transport is fairly easily available to and from a large variety of destinations, the time involved should not be prohibitive and currently there are good opportunities for economical travel by air.

Clearly the trainer will also have to travel, unless the most convenient venue happens to be in the trainer's locality. The same applies to any additional contributors to the course. Thus arise some other unavoidable additional costs.

Although accommodation is of course a cost, this would be likely to arise anyway with residential training. Only if training is conducted near to each manager's place of work can this cost be avoided. However, with many types of training it is recognized that there is a benefit in it being conducted on a residential basis, as business discussions rarely end when the trainer turns off the projector.

Again, hiring a training facility is a cost, but this is as likely to arise in a manager's home country as it is in another country. It can only be avoided if the organization has a facility of its own, which is convenient, but even then it is of course a fixed cost.

One factor that has to be considered is making arrangements with a venue, which could involve the need to visit in order to put everything in place before the training event takes place. This should be a contained cost in that it should not be necessary for more than one person to visit, usually an administrator who understands the requirements in detail.

So there are identifiable additional costs and benefits of training international managers together in one place. The costs are clear. The benefits are less easy to identify in strict financial terms.

Summary

Table 5.1 Summarize the costs and benefits

Action plan

Consider a training event for international managers and describe the benefits and costs in the table below, assessing the financial impact where you are able to do so.