Offshoring Means New Challenges for Promoting Managers
STANFORD GRADUATE SCHOOL OF BUSINESS—Ian Davis, managing director of the global management consulting firm McKinsey & Co., was once at a dinner party where "a rather obnoxious" U.S. senator was jawboning about the perils of outsourcing. "He went on about how disgraceful it was that American jobs were going to India and how it should be stopped," Davis told a packed house in Bishop Auditorium Nov. 4. "And then an Indian gentleman stood up and said, ‘Mr. Senator, we will not take any other job from anyone in America—if we can have all our graduates back.'"
The line got a big laugh from the hundreds of multinational students who showed up to hear Davis' talk, part of a wide-ranging View from the Top lecture series sponsored by the Stanford Graduate School of Business. As the personable Englishman noted, though, globalization clearly is a serious theme on the minds of CEOs around the world today.
An Oxford graduate elected to lead McKinsey & Co. in 2003 after a 23-year career with the firm, Davis said that outsourcing and offshoring are "unstoppable" trends that began shortly after World War II and now are affecting countries far beyond the United States and India. (Japan is losing jobs to China, for example, while Sweden is losing jobs to the Baltic states.)
He said globalization is starting to have a visible impact on the way corporate headquarters operate as well—even in areas like human resources and marketing. Davis recalled one executive he met who was wrestling with an increasingly common problem: Should he promote a talented employee making $40,000 a year in India over a less-qualified manager making a six-figure salary in the United States? And if so, what should the Indian be paid?
Another worry on the minds of global CEOs, Davis said, is the pressing need to match employees with the right capabilities to the tasks that need doing. In China, for example, "They have tremendous engineering talent. The output of PhDs in China is greater than that of the U.S. and Europe put together," Davis said. Yet nearly every Chinese CEO he has met says his company is short of general managers, financial analysts, and marketing people. In the next decade, Davis told the students, "There's going to be a tremendous focus on capabilities. It's a wonderful time for you to be in the talent pool."
What types of business leadership skills are likely to be needed in the 21st century? "Irrespective of the country or the geography or the industry you come from," Davis said, "I think we are going to be seeing a move from what I call ‘hard' types of skills to ‘softer' types of skills." Managers who understand analysis, strategy, engineering, and technology are still going to be crucial, he said, "but I think they have to be interspersed with people who understand how teams work, how organizations work, how people are motivated. … People who actually think in those ways are going to become more and more valuable resources."
Executives who really understand different cultures are going to be in demand as well, Davis said. "It's not enough just to spend a couple of years working in two or three different countries. The number of people, particularly Americans [who've done that] and still don't have a global mindset is staggering." For Davis, the ultimate definition of a winning company would be one in which a person's nationality is practically irrelevant—where a manager could move from Malaysia or Sri Lanka to a head office in Chicago and be almost immediately productive. "It's a huge challenge," Davis said, "but that's what the mindset has to be."
A third skill 21st-century managers will need is diplomacy—the ability to influence events and persuade people while always being respected and trusted. "Trust," Davis predicted, "is going to become a massively important word [while] power, status, hierarchy—hopefully, those are going to be dead words in 15 years' time."
Finally, Davis said, executives need to be more flexible, particularly in the way they offer careers to their employees. "We're seeing, as I'm sure everybody else is, this demand for a different set of opportunities in the way employees live their lives and go to work." That's particularly true for women employees, he said, but "that's going to be true for everyone." The goal, he said, should be "adjusting careers to individuals, rather than individuals to careers."