Marcel Lorent, HR Manager of International Mobility at Solvay Group, is challenged with the problem of resolving the expatriation status of four of the company's well-valued executives. Lorent must come up with effective management of the expat process to enable the company to balance its needs and its employees' necessities and their lives in general.
Boris Groysberg; Nitin Nohria; Kerry Herman
Harvard Business Review (409079-PDF-ENG)
January 22, 2009
Case questions answered:
We have uploaded two case solutions, which both answer the following questions:
- Discuss Solvay Group’s international assignments strategy. What worked well? What did not?
- How would you resolve the individual challenges facing the four executives in the international assignments program? Would you grant their requests? Explain your answer.
- Develop a specific course of actions that Solvay should undertake to effectively manage its repatriation process.
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Case answers for Solvay Group: International Mobility and Managing Expatriates
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Executive Summary – Solvay Group: International Mobility and Managing Expatriates
This report was commissioned by Solvay Group, a 21st-century company specializing in three sectors of Chemicals, Plastics, and Pharmaceutical development and manufacturing. In 1863, Ernest Solvay founded a company in his own name, seeking to profit from a process he invented which produced sodium carbonate, or ‘soda ash’.
As this company expands in an increasingly interconnected global economy, Solvay has slowly shifted from the multinational tactics previously employed to become truly global. This has involved many changes to the structure of the business, methods of managing talent, and increasingly formalized approach to the international mobility of employees.
In light of this evolving model, Solvay Group’s Human Resources Manager for International Mobility, Marcel Lorent, has initiated an internal review to ensure a practical talent management strategy while balancing the unique and complex needs of employees.
Historically, the group approach to talent has been to hire high potential junior cadres, develop them in functionally and geographically diverse roles to ensure a consistent succession plan for senior leadership roles. However, in a culture of consensus and informal networks, legacy approaches to talent management and international mobility specifically present potential issues for the future of the company, if appropriate action is not taken.
A recent restructure has seen the reinstatement of strategic business units (Pharma, Chem, and Plastics), centralized competence centers (Human Resources, Compensation & Benefits and International Mobility), and business support centers (Regional support units, Credit Management, etc.) which report to the office of the Company Executives (COMEX). Within the International Mobility BSC, Marcel Lorent is working to delineate a practical talent management strategy while balancing the unique and complex needs of employees.
In this report, we will analyze the current strategy employed by the Solvay Group to shift further toward true transnationalism through increasing its global integration and propagation of a consistent global culture.
By going in-depth on the specific implications of the recent changes on individual workers, we will provide practical insight into the broader benefits and challenges of the global enterprise from a Human Resource Management perspective.
To assist the Solvay Group in moving forward, a recent case involving transfers of four employees will be reviewed. Using this, the report will be sectioned into three areas of reference:
- Analysis of International Assignment (IA) strategy as stands
- Case review of the recent transfer situation
- Areas of Improvement
The report will then consider a number of potential solutions, measuring them against a framework of company utility, logistical benefit, employee satisfaction, and ease of implementation. Those which are most effective will then be proposed as a course of action.
These recommendations include:
- Establishment of Contract Calendars
- Integration of HR data
- Restructuring of IM division
- Expanding the scope of mentor support
It is our expectation that should these recommendations be actioned, Solvay Group will see an overall improvement to their international mobility program.
Jack Welch, the former CEO of GE, once said that an organization’s ability to learn and translate that learning into action rapidly is the ultimate competitive advantage. Solvay’s Talent Management and related International Mobility Policies (TM/TMP & IM/IMP, respectively), while imperfect, appear to give credence to this premise.
As a group moving from a multinational to a truly global approach, the Solvay Group has taken steps to clarify, streamline, and standardize its approach to both operations and management across a growing number of sites. Change is always difficult, and in a company culture geared toward consensus, this case is even more so. Specifically, Solvay’s approach to centralized units and centers, global management of talent and labor, and international mobility are the three areas of focus within this report.
After reviewing several examples where a strict interpretation of IMP may not yield the best overall result for the company, this report will highlight a number of recommendations to improve the repatriation process and the effective utilization of talent across the group.
Centralized Support Functions at Solvay Group
In multinational business, there is a tendency for regional bodies to grow disconnected from each other, and for micro-cultures to take precedence over a shared corporate culture (Miroshnik 2002). In a move toward globalism, the Solvay Group leadership, including the Chairman and HR General Manager, opted to restructure corporate divisions based in-country and reorientated them into strategic business units (SBU), centralized competence centers (CC), and business support centers (BSC).
This initiative has seen CCs set up in Brussels, charged with streamlining and optimizing strategic company policy in areas such as law, finance, trade, and human resources. The BSCs have a responsibility to work with the SBUs to implement policy and practice across different regions.
This new structure reflects the requirements of an increasingly globalized workforce, and the desire for the Solvay Group to ensure their employees are connected to a central culture and benefit from shared learning. While this top-down approach has its flaws, feedback is intended to be channeled symbiotically between the centers and units to limit bureaucratic inefficiencies and promote both transparency and co-operation. The resultant efforts to drive efficiencies through consistency and oversight are intended to reflect Solvay’s geocentric nature.
Talent Management and Leadership Succession
A hallmark of the Solvay Group model has been the emphasis on ‘homegrown talent’, and the retention of cadres throughout their careers. With current staff retention estimated to ~90%, there is evidence to support that the incumbent approaches have combined to be effective. However, as an increasingly global business, reliance on legacy programs alone ignores the potential benefits of differentiated approaches and the risks of poor scalability.
Historically, the use of ‘talent round-tables’ and ‘potential pools’ have provided a 3-Dimensional view of the cadres on hand and the relevant training to ensure a glut of candidates for senior management positions who meet the unspoken requirements of cross-functional, cross-border and cross-divisional experience.
Simultaneously, their success in filling senior positions highlighted a dearth of candidates suitable for the vacated middle management roles due to a narrowly applied TMP. With increasingly overqualified middle management and uncertainty in their current succession plan, the Solvay Group risks being the victim of its own effort to develop and upskill future leaders. This flaw has been noted by the head of Solvay’s People Development and Performance CC who has worked to deepen the succession planning through broadening the talent pool.
A key aspect of talent development in global business is IM. This is unarguably the case at Solvay Group where the geocentric focus of the company has translated to a somewhat paradoxical situation. The success of their ‘homegrown’ approach effect has seen many employees on assignment stationed in foreign countries or regions away from their national homeland.
This approach to developing talent using cross-cultural experiences allows cadres to experience divergence, drive convergence, and strengthen international networks (Unruh & Cabrera, 2013). However, without a suitable career path or repatriation plan, the Solvay Group risks losing all potential ROI associated with its TMP.
International Expatriation and Repatriation of Solvay Group
The basic notion behind the international project is a dual advantage system. It helps the Solvay Group to broaden their knowledge base and optimize operations while providing career opportunities for its employees (Gripenberg, 2013). Initially, a resort to spread tacit knowledge and drive a consistent process, these drivers have declined in importance as Solvay became more entrenched in respective regions.
With the recruitment of more local talent, along with technological advances, the primary drivers of IM have shifted to expand a consistent corporate culture and become a prerequisite in the development of senior leadership (Bonache & Brewster, 2001). By developing talent through IM, Solvay’s leadership will inevitably become more globally literate and rounded securing better business outcomes (Bartlett 2014).
With this growth and change, comes a new source of friction as finding the balance between local knowledge and global competency. A previously ad-hoc and flexible process catering for a small number of expats requires more structure identification, assessment, and agreement stages. With this, the cost and complexity associated with IM also increase as new challenges require a greater level of expertise and attention to manage.
Historically, local teams have, at times, felt excluded from the transfer process, being assigned international members who may not be a good fit or have the required skills to contribute effectively. In more recent times, HRMs with business acumen, including Lorent, have been working to improve the transfer process by communicating with target units to ensure not just a good fit, but the desired fit.
With the recent centralization and focus on international experience in talent management, Solvay Group’s IMP is a key facilitator to a globally consistent culture and administrative support. As a result, the evolution of the IMP and the structured management of expats before, during and post assignment are of paramount importance.
Although difficult to quantify, it is a worthwhile investment to appropriately prepare expats in advance of a transfer. This is equally the responsibility of the company and employee, in a company culture geared towards consensus and informal networks, with inflexible or unclear paths to the assignment. Relationships have often dictated transfers, rather than deliberate, criteria driven scouting.
As a result, expats have, at times been informed of a move to, say, Korea, only to be told months later that they are moving to the US instead. This opacity limited the expats’ ability to build relationships with the local staff remotely, look for neighborhoods and schools, or to take basic culture/language courses. Further lack of clarity around remuneration structure adds stress to families where a partner’s lost income is a factor and restricts their ability to set key expectations from a salary and incentive package (Tarique, 2016).
Once in the host country, it would seem that Solvay Group’s IMP is greatly aided by established professional networks and the goodwill of local staff. While many struggles to settle or even understand the domestic approach to professional responsibilities and management conduct, such networks helped expats with both complex work arrangements as well as locating the local grocer. It is this sense of connection to the host-country and interrelatedness between units that enables successful assignments (Clouse & Watkins 2009).
Lorent has observed that those expats whose families were accommodated were more likely to see out the entirety of their assignment, or even extend should it be required. While some expats and family failed to sufficiently integrate into new countries (through language or culture incompatibilities), the relationships fostered and successfully homogenous culture globally has helped mitigated cases wherein adaptability was lacking.
Solvay Group’s history has been highlighted with stories of TNCs on secondment in Brussels gaining a better understanding of how to work symbiotically with the head office to achieve corporate goals upon their return. However, on the other side of the same coin, many expats who found new homes in foreign lands felt a disconnect with their former peers and company leadership after a time abroad. This has been shown to create a greater level of anxiety in expats returning home than those about to enter a new adventure (Linhares, 2008).
As in most things in life, it’s the way you finish that counts. In IM, this is especially the case. As touched on earlier, the concept of return for investment has been floated in the context of optimizing international mobility, as part of a strategic pool approach (Schuler 1992).
The majority of multinationals surveyed by KPMG declared they didn’t conduct cost-benefit assessments for IAs given the difficulty in quantifying incremental returns. Lorent takes seriously the need to be accountable to business decisions but acknowledges that the nature of human experience and relationships is quite intangible. Perhaps the bigger focus should be the necessary retention of current/former expats and the appropriate utilization of the skills developed on assignment.
In order to retain globally literate and technically capable professionals, the Solvay Group needs to ameliorate the identified issues in each stage of its IMP to ensure best-fit candidates are recruited, developed and challenged, hence, it will help in improving business outcomes.
Practical Challenges of International Mobility
Some of the current challenges facing Lorent and the IM BSC are explored below. In order to assess and advise whether or not to make exceptions to the IMP, Lorent will first need to determine which aspects of the IMP geocentric framework call for their approval (Molinsky & Hahn, 2016).