Globalization has opened up many opportunities for business growth, starting with affordable outsourcing rates and favorable tax jurisdictions to unlocking the many diverse skills, experiences, and potentially innovative ideas that accompany culturally diverse teams. At the same time, like most potentially rewarding endeavors, this corporate model comes with its series of risks and limitations. In this post, we dig into the main perks and pitfalls of managing international teams, offering tips on how to maximize the first and minimize the second.
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The ups and downs of diversity
Culturally diverse teams can bring many advantages to the table, but managing cross-cultural divisions can also become a huge challenge. The immediate benefits of international collaboration include access to a larger pool of mindsets and ideas, which could be very beneficial for business promotion. Even when operating on a local scale, a company can benefit from employing people stemming from different backgrounds because this strategy can result in entirely new product marketing angles.
A great marketing example of this is Diageo, a parent company of several major alcohol brands, including Johnny Walker and Guinness. Traditionally, the whole alcohol consumption industry targeted white men, which was obvious in corporate hiring and, consequently, marketing policies. Today, 45% of Diageo’s leaders in the UK division are women and 46% stem from ethnically diverse backgrounds.
A similar policy is seen through the brand’s advertising efforts. For example, Diageo recently signed Priyanka Chopra to represent its products – because, let’s be frank, ladies also need a drink sometimes.
But the benefits of working in diverse teams go beyond marketing to previously overlooked audiences or teaming up with advocates from different backgrounds. More immediate business perks include enhanced creativity and innovation, better problem-solving through multiple perspectives, and improved understanding of the products or services’ full potential.
At the same time, the potential for conflict and misunderstanding is just as great. Even though diverse opinions can result in many innovative ideas, the actual decision-making process tends to slow down due to the sheer number of perspectives that need to be heard and analyzed. When maintaining a diverse team in-house rather than remotely, the initial integration and onboarding stage can also pose challenges.
Here, careful guidance is the key to success. Depending on company specifics, management can introduce training that focuses on cross-cultural communication and teamwork or pair overseas experts with local mentors to ensure a smooth exchange of ideas.
Creating a safe and inclusive workplace is another strategy that cannot go wrong – even though there is no universal guide on how to achieve this. But regardless of the business specifics or global collaborations, any modern business should invest in building diverse, inclusive teams because that’s what the young professionals are looking for and that’s how a company can ensure steady talent acquisition – on local and international levels.
Access to specific skills & experiences
Another double-edged sword of international collaboration that can be a huge benefit and a major disadvantage. Access to a global talent pool can help find practically any professional, no matter how specific the required skills might be; but the search itself can take more time than the company can spare. Besides, the Paradox of Choice applies to hiring just as it does to marketing – too many options aren’t necessarily a good thing.
Using the right software to maintain an effective recruiting pipeline is one way to accelerate the talent search. Another one is a careful reevaluation of the skills that are an absolute must for a specific job opening. In most cases, the list will not be that long, especially when hard skills are concerned. So, the best way to unlock the global talent pool without getting stuck in the endless candidate screening circle is to set realistic priorities. And, of course, to keep timelines in mind.
Another approach that can prove even more effective in the long run is to prioritize soft and transferable skills. Today’s professional landscape is developing at an unprecedented pace and skills get obsolete faster than ever before. So, the best strategy to ensure high employee retention is to invest in human talent a company already has. Introducing opportunities for upskilling and reskilling is one way to achieve that, and prioritizing candidates’ soft skills (especially adaptability) when hiring new people is another. Besides, if you’re already managing a diverse team, a focus on such soft skills as empathy and conflict resolution can go a long way to prevent misunderstanding and ensure effective collaboration.
Opportunities for market expansion
We already touched upon new marketing opportunities when discussing the ups and downs of working in culturally diverse teams, but the actual potential for market expansion goes beyond advertising to underrepresented communities. International teams, when handled right, can become key to unlocking entirely new markets through narrow, localized expertise only on-site experts can provide.
Take the Nike Pro Hijab headscarf for female athletes that ensured the company’s successful expansion to the Islamic market as an example. Or, consider the astonishing popularity of the luxury brand Louis Vuitton in China, offering even steeper pricing than in the West. However, modifying some of the company’s colors and overall product aesthetics has helped the brand gain astonishing popularity in the previously untapped market – which would never be possible without local, on-the-ground expertise.
However, there are two sides to every coin – and a pricey market expansion can quickly go wrong. Unfortunately, case studies for this are also numerous – even when the cultural differences are not so vast, or perhaps exactly because they do not look so vast.
A major US retail chain, Walmart, had to exit from Germany after a few years of operation because the company could not align US business practices with Western European values. Here, the biggest problem was not the actual market analysis but HR management – many US management practices, like obligatory smiling and regular teamwork exercises, seemed awkward and out-of-place to German staff. Besides, Walmart failed to consider local labor laws and strict store hours, which were out of line with the company’s US model.
Later in the 2010s, another US retail store, Target, made similar mistakes while trying to expand to Canada, once again proving that local expertise is key to success in a new market. So, even when aiming for seemingly similar markets, teaming with experts who have a thorough understanding of local specifics is a must because the cost of a mistake (both financial and reputational) can be very high.
Time zones and team asynchronicity
Of course, not all companies are luxury fashion brands or major retail chains – some of us, mere mortals in IT, media, and other industries, work on tight deadlines and are dependent on regular communication with our colleagues. That’s where differences in time zones can become a huge nuisance – unless turned into an effective leverage that ensures round-the-clock availability instead. Most of the daily communication challenges can be solved with basic software for asynchronous collaboration – project trackers, document sharing, and video recording when necessary. Advances in scheduling software can alleviate additional challenges of setting synchronous screen-to-screen time – for example, tools like Calendly can help arrange suitable time windows even when multiple users are involved.
Besides, the mass adoption of remote and hybrid work models has already alleviated most of the challenges associated with managing remote teams. Even though some companies have started voicing return-to-office demands, it’s clear that many other businesses will not abandon a more flexible hybrid model, allowing their employees a better work-life balance and ensuring enhanced productivity.
With international teams, promoting flexibility and encouraging understanding is a sure way to minimize the risks of delays when working in different time zones. Besides, for some businesses, additional time zones can translate into extended business hours, if not round-the-clock availability. Obviously, this is a huge perk for businesses that depend on continuous coverage.
Legal and fiscal ambiguities
So far, the biggest challenge of international collaboration is regulatory compliance across jurisdictions. Unfortunately, this disadvantage does not have an immediate perk side to it – businesses will need to research legal specifics before officially employing people from other countries.
Fiscal complexities, however, may have a hidden bonus of working in more favorable jurisdictions – even though the original setup can be daunting. At the same time, hiring a professional with an understanding of local laws and taxes is something no international company can avoid – not in the long run.
So, is managing international teams worth the effort? That’s the kind of decision every company will need to make for itself because, despite the many potential rewards, the associated risks are not inconsiderable. For small companies operating on a purely local scale, such an investment might seem excessive. At the same time, one should not forget that only physical businesses today can remain 100% local, whereas any phygital activity usually results in some kind of cross-cultural collaboration.
So, practically any company today can benefit from mastering the ins and outs of international collaboration – whether for increasing profits, gaining access to specialized skills, or strengthening the company’s reputation online. Besides, the tips mentioned above can help alleviate most of the challenges associated with international teams. And, if you’d like more ideas on engaging employees, check out our post on the correlation between a positive corporate culture and employee productivity – that should give you more ideas on successfully leading diverse teams.