Fast-growing multi-national compa­nies have many chal­lenges to deal with, for example

• Orga­ni­za­tional inef­fi­cien­cies
• Rising complex­i­ties
• Cash flow crunch
• Diffi­culty keeping up with customer service issues
• Resis­tance to change and unwill­ing­ness to adapt from employees and managers
• Incon­sis­tent manage­ment styles

Just to name a few. But while growth can of course gener­ally be consid­ered a good thing, any and all of these issues, if left unchecked, can bank­rupt a company and destroy its value. 

That would already be enough to make life inter­esting, if not down­right diffi­cult. But now imagine that your industry is going through some extreme changes on top of that — like the auto­mo­tive industry is currently doing. Suddenly, a company going through the above-mentioned chal­lenges of fast growth also faces a steep decrease in orders. 

Can you hear the alarm bells going off in your head already? 

Take a deep breath! You aren’t the only one. In fact, we have an intriguing case of a Swiss multi-national corpo­ra­tion and supplier in the mechan­ical engi­neering space, facing a lot of the same chal­lenges you may be expe­ri­encing your­self right now. Even if they’re not exactly the same, our discus­sion and eval­u­a­tion of the chal­lenges, as well as our proposed solu­tions, may give you a lot of insight into how to tackle your own chal­lenges — and succeed.

Fast Growth and Order Declines: The Thing Bank­ruptcy Stories are made of 

Imagine the following scenario of our Switzer­land-based multi-national corpo­ra­tion — let’s call it Swiss Multi* — with customers in the auto­mo­tive industry. Swiss Multi employs over 2,000 people world­wide and provides sales and service support in over 60 coun­tries through subsidiaries and inde­pen­dent agents. 

Swiss Multi has always oper­ated on value-driven lead­er­ship, which served it well so far. The company has grown fast, first by expanding HQ and then by acquiring a handful of small to medium-sized inter­na­tional compa­nies in the last ten years. All this time, Swiss Multi has focused solely on the auto­mo­tive sector. 

The corpo­ra­tion is currently strug­gling with two major chal­lenges: 

1. Orga­ni­za­tional Inef­fi­cien­cies

The fast growth and subse­quent change manage­ment efforts have put the company’s struc­tures and processes into a state of constant flux, never allowing them to level off and stabi­lize. Things aren’t running as smoothly on the orga­ni­za­tional front as Swiss Multi’s leaders would hope. 

2. Order Decline

Because of the current economic decline in the auto­mo­tive industry, Swiss Multi’s main customers have been going through cutbacks in the past couple of years — and Swiss Multi is one of the suppliers who are really feeling these cutbacks in the form of drastic order decline. 

In the last fiscal year, Swiss Multi gener­ated only 400 million Swiss Francs in revenue, a decrease of 15% compared to the previous year. Sales have plum­meted by 17% while costs have skyrock­eted due to the company’s fast growth, leading to a nose­dive in profits (EBIT) from formerly 15% to 6%. 

Trouble is, Swiss Multi doesn’t have other sectors up their sleeve to turn their focus to, while the auto­mo­tive branch strug­gles to recover. Swiss Multi can fight for their piece of the shrinking cake or wait for the auto­mo­tive branch to recover — which isn’t exactly predictable.

Exac­er­bating Factors

With revenue sinking like a brick in water, cutting costs is inevitable. But of course, cutting costs shouldn’t come at the expense of Swiss Multi’s employees or the struc­tures they’ve been working to develop. If at all possible, the company wants to avoid letting good, knowl­edge­able personnel go, or to have to stall or reverse the orga­ni­za­tional progress already made throughout their change manage­ment efforts. 

Added to that, the general managers of Swiss Multi’s national subsidiaries are also unhappy; the manage­ment board itself doesn’t seem to be living by their self-proclaimed approach of value-driven lead­er­ship, stating that “we have other prob­lems to deal with right now, we can’t focus on furthering lead­er­ship values”. Meaning that values like quality, inno­va­tion, and respon­si­bility feel incon­ve­nient and end up falling by the wayside.

It doesn’t help that, on top of all this, the top exec­u­tives in the US have iden­ti­fied specific, untackled chal­lenges posed in Swiss Multi’s lead­er­ship devel­op­ment, because, as already stated, there are greater chal­lenges to be dealt with. 

But are there really? 

Don’t misun­der­stand; any and all of these chal­lenges absolutely must be addressed if Swiss Multi hopes to continue being successful and step back to the top. A case could be made, though, that if the corpo­ra­tion already had a host of true global leaders, they would have been able to foresee and predict these chal­lenges arising — and would have known what measures to imple­ment to avoid them ever becoming a problem. 

Let’s put a pin in this issue for a second, since there’s no point in crying over spilled milk. First, we’ll have a look at Swiss Multi’s goals, which have been set to try to turn the situ­a­tion around. Then we’ll discuss exactly how Swiss Multi should go about meeting those goals. 

Goals to Get Back on Track

Swiss Multi has a good grasp of their objec­tives in order to face the above-mentioned chal­lenges. 

First and fore­most, they’re targeting a strategy change with regard to their laser-focus on one industry. The goal is to become more inde­pen­dent from the auto­mo­tive sector and diver­sify sales chan­nels. Gaining new markets, for example in aircraft engi­neering, will help boost sales and make them less vulner­able to fluc­tu­ating indus­tries. 

Second, Swiss Multi strives to allow its orga­ni­za­tion to finally settle down and stabi­lize. All the fast changes and add-ons in the last decade have left complex and inef­fi­cient struc­tures, with confusing redun­dan­cies and unclear chains of command. The plan is to support the inde­pen­dently laboring national orga­ni­za­tions by consol­i­dating struc­tures and processes. 

Reaching either of those goals won’t be easy, consid­ering the extent of the changes imple­mented in the company over the last ten years. It hasn’t just grown; it has exploded. The added compa­nies brought with them new prod­ucts, as well as their own struc­tures and ways of doing things, which lead to extremely high complexity of orga­ni­za­tional struc­tures, modes of oper­a­tion, and diverse product range. 

An over­ar­ching change manage­ment strategy has to be imple­mented to consol­i­date them all. But leaders must master change manage­ment on a global scale in order to be able to imple­ment it in the indi­vidual subsidiaries and stop the collapse of struc­tures currently in flux. And they will have to do so in the face of strict cost reduc­tions while trying to main­tain existing jobs and preventing a brain drain.

Not an easy task. Which is why Swiss Multi has decided to focus on the following solu­tion strategy. 

The Fix: Imple­menting an In-House Global Lead­er­ship Devel­op­ment Program

Remember the pin we put in the topic of the company not having the lead­er­ship neces­sary to under­stand that the company was

1. taking a big risk in focusing only on one industry and market, and
2. not prop­erly tack­ling the change manage­ment neces­sary to deal with the company’s rapid expan­sion. 

According to the World Economic Forum 2013, “the global lead­er­ship vacuum remains the biggest chal­lenge of all for 2013 and beyond”. This hasn’t changed in the past seven years. Of the 52% of multi-national corpo­ra­tions that plan to expand their oper­a­tions, only 16% have enough global leaders to fill these crit­ical roles, and many compa­nies have had to cut back on global strate­gies due to their lack of adequately prepared global leaders. This lack leads to chal­lenges like the following:

• Leaders struggle with increasing complexity, ambi­guity, and uncer­tainty in their day-to-day tasks, thus leading to shrinking market shares.
• Leaders are unsure of how and when to adapt their lead­er­ship style to fit local circum­stances, failing to achieve corpo­rate objec­tives.
• Compa­nies struggle to align their corpo­rate strategy with multi-cultural dynamics — and so their orga­ni­za­tion is being out-competed in global markets.

These are only some of the chal­lenges that can arise from a lack of adequately prepared global leaders but, in the context of Swiss Multi, they sound familiar, right? These are exactly the things the company has been strug­gling with. 

Enter the Euro­pean Academy for Exec­u­tive Educa­tion, or eurac, an inte­grated inter­na­tional busi­ness school, which provides compre­hen­sive and prac­tical, state-of-the-art lead­er­ship- and coaching train­ings for senior and top manage­ment in all indus­tries. This includes supporting multi-national compa­nies in setting up their own in-house global lead­er­ship (GLD) devel­op­ment programs. 

In fact, eurac knows exactly how they would approach setting up such a GLD program at Swiss Multi: 

1. Target Plan­ning

The first step is always to define goals and goal-required compe­ten­cies of all leaders involved. Together with the company, or the company’s deci­sion-maker, eurac defines the goals the leaders are supposed to achieve by partic­i­pating in the GLD program. Based on these goals, they define the compe­ten­cies neces­sary to accom­plish them. 

Key compe­ten­cies of aspiring global leaders are: 

It’s impor­tant to remember in setting these goals and core compe­ten­cies of the GLD program, to follow the over­ar­ching strategic path set out by Swiss Multi itself. The company must lay out the path so that the GLD program can work within that struc­ture. 

With Swiss Multi’s over­ar­ching strategy in mind — diver­si­fying markets and stabi­lizing the orga­ni­za­tional struc­ture — the main compe­ten­cies that need to be devel­oped and trained should focus on the cate­gories Global Busi­ness Exper­tise and Multi-Cultural Compe­ten­cies. 

These will also have to be broken down to the level of each national subsidiary under the company’s inter­na­tion­ally span­ning wing. Stabi­lizing the struc­ture across the entire orga­ni­za­tion means defining subgoals in each loca­tion — which may result in varying emphasis and approaches in training global leaders. 

2. Choosing the Right Partic­i­pants for the Program

Not every­body is cut out to be a global leader within the frame of the pre-set goals. Choosing people who fit, is there­fore impor­tant for partic­i­pants to do a good job in fulfilling those goals; but also from a finan­cial point of view. There’s no point in taking on the expen­di­ture of training someone who doesn’t have the stuff to be a successful global leader. That being said, eurac does believe that anybody can become a global leader — as long as they set their mind to it and are willing to work on them­selves. 

With that in mind, Swiss Multi’s perfect poten­tial program candi­dates, who exhibit all the neces­sary compe­ten­cies, skills, traits and atti­tudes of global leaders, are

• leaders of the national subsidiaries, 
• inter­na­tional leaders, and 
• cross-func­tional leaders within the company’s matrix orga­ni­za­tion. 

Together with eurac, Swiss Multi must eval­uate these leaders’ current abil­i­ties and compare them with the two deter­mined key compe­ten­cies (Global Busi­ness Exper­tise and Multi-Cultural Compe­ten­cies) to weed through the candi­dates and deter­mine the partic­i­pants in the GLD program for each subsidiary. 

3. Indi­vidual Assess­ment of Partic­i­pants

For a GLD program to be most effec­tive, all selected leaders must join every single training and cannot cherry-pick what parts of the program to partic­i­pate in. Based on the prede­ter­mined goals and objec­tives, eurac will deter­mine and suggest the best mix between one-on-one coach­ings and consulting, as well as group training, that will work best with the selected leaders. The lead­er­ship devel­op­ment training is always goal-oriented, and often takes the form of coaching or in-person training.

Before we can jump into setting up the neces­sary indi­vidual training programs, each partic­i­pant must be assessed and eval­u­ated to deter­mine in which skills and compe­ten­cies they’re lacking. This is the only way to deter­mine indi­vidual goals for each partic­i­pant. Based on this assess­ment, the GLD program then fills the gap between the current compe­ten­cies that the leaders hold and the compe­ten­cies required to carry out the job effec­tively. 

In Swiss Multi’s case, based on the key compe­ten­cies to be devel­oped and trained, the partic­i­pants would be assessed predom­i­nantly in the following compe­ten­cies and their dimen­sions:

• Global Busi­ness Exper­tise
  • Vision And Strategic Thinking
  • Being Busi­ness Savvy
  • Managing Commu­ni­ties
  • Being Orga­ni­za­tional Savvy
  • Leading Change
• Multi-Cultural Compe­ten­cies
  • Cultural Sensi­tivity
  • Cultural Intel­li­gence
  • Mindful Inter­cul­tural Commu­ni­ca­tion

Based on the results of these indi­vidual eval­u­a­tions, as well as the goals and subgoals of each subsidiary, eurac can develop the best training plan for each partic­i­pant, comprised of the best mix between: 

• online e‑learning,
• indi­vidual coaching, 
• team coaching, and
• prac­tical onsite training at the national subsidiaries.

Once the training is complete, eurac reeval­u­ates the partic­i­pants’ abil­i­ties and measures their improve­ments by re-assessing their compe­ten­cies and skills to deci­pher improve­ments. 

After a successful run through the in-house global lead­er­ship program, the partic­i­pating leaders will have gained all the compe­ten­cies and skills needed to solve the current chal­lenges and lead Swiss Multi to its goals.

4. The Time Frame 

eurac CEO and global lead­er­ship expert Dr. Wolf­gang Schmitz knows that prep­ping for the program takes between five to six weeks, depending on the size of the company and the number of candi­dates. 

For Swiss Multi, the prepa­ra­tion period would be set to the following time frame: 

• Target Plan­ning — 1 week
• Choosing the Partic­i­pants — 2 weeks
• Indi­vidual Assess­ment of Partic­i­pants — 3 weeks

After that, things depend not only on the size and goals of the company but also on a myriad of other details. This makes it diffi­cult to predict a specific time frame, which differs from orga­ni­za­tion to orga­ni­za­tion. 

If all partic­i­pants and parties involved prior­i­tize their training and put in maximum effort and zeal, the GLD program of a company the size of Swiss Multi could be completed within a year. In prac­tice, this isn’t real­istic; not because the program isn’t effec­tive or because partic­i­pants wouldn’t take it seri­ously or give it their best effort, but because they are still running the company, their subsidiaries, and their teams at the same time. 

A real­istic and achiev­able time frame for the comple­tion of Swiss Multi’s GLD program is two years. Of course, partic­i­pants can imme­di­ately start putting to use all they learn during that time — they won’t have to wait to act like global leaders until those two years are over. Swiss Multi would start reaping the bene­fits long before the program itself is over. 

5. The Cost Factor

Depending on the company’s scope, number of partic­i­pants, as well as the current skills and compe­ten­cies of leaders, devel­oping and conducting an in-house global lead­er­ship devel­op­ment program with eurac will cost approx­i­mately 150,000 Swiss Francs (SFR). 

This might initially sound like a lot. But offset those 150,000 SFR against the approx­i­mately 65 million SFR Swiss Multi is losing every year because of inef­fec­tive leaders who don’t yet have the knowl­edge and expe­ri­ence to imple­ment the neces­sary measures, and the ROI easily redeems those costs. 

Train Your Own Global Leaders with eurac

Are you and your company faced with similar chal­lenges as Swiss Multi? Having well-prepared global leaders in your corner could be the most effec­tive way to over­come them. 

If you want to learn more about how to set up an in-house GLD program to train your leaders to become global leaders, please don’t hesi­tate to get in touch with us at eurac here to make an appoint­ment for a free first inter­view. Maybe we can already help you sort out and define a few things then. 

Also, make sure you don’t miss out on our next arti­cles and case studies on how to develop global leaders by signing up for our newsletter:

*fictional name; any simi­lar­i­ties with existing compa­nies or enti­ties are coin­ci­dental and unin­tended.