How global is your senior team? If more and more of your revenue and profits are coming from outside the U.S., should the composition of your top team reflect this?

Author:Banham, Russ
Position:GLOBALIZATION - Company overview

Shivan S. Subramaniam is the quintessence of the modern American CEO. O.K., his name doesn't read like "Sam Walton" or '"Warren Buffett" or even "Howard Schultz," but he and his senior management team at commercial insurer FM Global in blue-collar Johnston, R.I., are the face of tomorrow's U.S. multinational corporation. Maybe even the face of today.

Subramaniam is or Indian descent. Vice Chairman Ruud Bosman hails from The Netherlands. Senior vice president of the international division Ken Davey is from the United Kingdom, as is Chris Johnson, senior vice president of marketing and enterprise learning. Other senior team members, like CFO Jeff Burchill, were born in the U.S., but have served multiple, long stints overseas. Of the 11 most senior executives in the organization, seven are foreign nationals.

A venerable company that traces its heritage to 1835 as an insurer of factories, office buildings and other business property, FM Global today has 60 offices worldwide and annual revenues of $2.5 billion. Until the modern era, however, its senior management team looked like most other senior management teams at U.S. corporations. "Everybody went to a New England school and was very, very Yankee," Subramaniam says. "There's nothing wrong with that if you're a local company selling just in New England. But if your marketplace is global, your senior managers and your workforce should be as close to global as possible."

He explains why: "The value is the incredible diversity of perspectives coming from people who know each other well, and our product and services inside out, yet see things differently," he says. "As a global company, having people who truly understand the cultures you serve offers a depth of opinions that you need to make the most informed decisions."

Apparently, more U.S. multinational corporations are beginning to employ senior management teams looking somewhat like FM Global's. This contrasts rather sharply with the composition of their boards of directors. As we pointed out in Part One of this series (Chief Executive, November/December 2009), only six percent of directors serving the 200 largest companies in the Standard and Poor's 500 are foreign nationals. A much larger percentage of foreign nationals, on the other hand, serve in senior executive positions. We'd love to provide some quantitative proof in this regard, but studies are lacking. Nevertheless, it appears at least from the anecdotal evidence we've compiled that the composition of the C-level suite and senior management teams is looking a lot more like the national markets in which they compete.

The reasons for this varied make-up are many, but can be boiled down into one word--globalization. As U.S. companies interact and integrate with foreign partners, suppliers, vendors and markets, forming unique collaborations in the international economy, deeper perspectives on conducting business in these regions are necessary. A U.S.-born and -reared executive with foreign business experience can provide this insight, but it will be shaped by the person's Western cultural background. A foreign national, on the other hand, will have a more nuanced perception of opportunities and challenges. As Patricia Lenkov, president of New York-based executive search, firm Agility puts it, "If you're an American consumer products company, how can you sell in India unless you know how an Indian thinks?"

Others agree. "To understand the dynamics of emerging markets like China or India really requires that you spend quite a bit of time there or hire someone from that region who brings with him or...

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