Developing international workforce
Shinhan Bank sets example for globalizing employees
By Joel M. Evans
As Korean companies continue to extend their influence throughout the world, a major challenge facing them is in how to develop a global workforce. Corporations need employees that are competent, flexible, and able to accommodate the many demands placed on them in international settings. Regardless of whether employees are expatriates stationed abroad, or administrators working out of the home office, they need to be able to interact closely and efficiently with foreign employees and customers. So what are the important trends being adopted by Korean companies as they continue their quest to foster international managers? And are these trends moving Korea in the right direction?
The answer to the latter is “yes.” In this article, we take a brief look at a major provider of financial services, Shinhan Bank, and examine some of their international HR practices alongside research conducted by top business scholars. The result is a promising look at how Shinhan is helping to lead the way in international workforce development.
In order to acquire a strong, culturally flexible workforce, companies need to develop their employees along three dimensions. First, employees need to have cultural knowledge, an awareness and understanding of other countries, cultures, and customs — the better to anticipate everything from trade laws to interpersonal business etiquette.
The second dimension is cultural confidence. This is even more important than cultural knowledge, because being culturally confident empowers employees to learn and adapt in new international settings. And finally, multinationals and other companies engaging in global business need to have fluent communications between the home office and the host country.
This means more than simply overcoming language barriers. It means having employees who understand the context in which business takes place in the host country. And that requires a level of cultural understanding that simply cannot be gained through traditional educational tools (e.g. “training sessions”, etc.).
It is this last dimension that is fast becoming a focus for international Korean firms. The ability of Koreans to acquire cultural knowledge and travel experience is already widely known. For example, most young Koreans today speak at least two languages —regardless of whether they have yet visited other countries.
Moreover, Koreans are not averse to traveling abroad. For instance, the number of Korean students studying abroad in the United States currently exceeds 100,000 — more than either India or China.
And yet in spite of this cultural and linguistic outreach, Korean companies are still faced with immense challenges posed by a globalized economy and the resulting challenges of communicating and coordinating affairs in a foreign host country.
How does Shinhan Bank cope with the demands of international business? With over 10,000 employees located in more than 900 branches in Asia, Europe and the U.K., and North America, it is critical for Shinhan Bank to develop managers who can communicate closely with foreign counterparts.
For Shinhan Bank, it all begins with strategic expatriate assignment. Here, managers are typically sent overseas for about three years, depending on the nature of the individual and the work involved.
This fulfills an immediate and obvious need in the way of overseas staffing — something that would be apparent to any internationally-focused business. But Shinhan Bank realizes that the real long-term benefits actually begin to accrue after a manager finishes an overseas assignment.
When managers are repatriated back to Korea, Shinhan transfers some of them to existing local branches. But even more importantly, many are transferred to positions at the head office, such as the Global Business Development Department, the Treasury Department, or the Global Business Support Department.
In this way, central management develops a culture of international expertise and authentic cultural fluency. The global HR managers at Shinhan see a difference in managers who have fulfilled overseas assignments, noting that they have a better understanding of cultural differences, as well as local laws and customs in their former host country.
And most importantly, these repatriated managers now provide a link to the original host country that facilitates communication and coordination at a level unattainable through other means. It is a link that can only be established by sending employees overseas and then repatriating them back to Korea.
But why is this so critical? Studies performed by Thomas J. Allen, professor at MIT’s Sloan School of Management, show that merely living in another country for a period of time — such as to attend a university — may not be enough to create a manager who is capable of remaining in the home office and fully interacting with counterparts in a host country.
In a series of studies conducted in Europe, Allen showed that merely living in another country didn’t necessarily translate into an ability to work closely and fluently with workers in that country.
Individuals learned language and cultural understanding, but nevertheless had challenges understanding technical problems when placed in a liaison role toward a company subsidiary in the host country.
On the other hand, individuals who had a work assignment, sabbatical, or internship abroad that was specific to their industry, returned with an enhanced ability to interact with workers in the host country.
So although living and studying abroad has its advantages in terms of language acquisition and cultural adaptation, there is no substitute for foreign work experience.
Korean corporations continue to be strong competitors in a rapidly changing globalized workplace. Research shows that the best way to develop communication and coordination links between the home office and foreign branches requires much more than training sessions or educational materials.
In the end, managers must be sent overseas to be fully immersed in a culture, then repatriated back to Korea. Doing so ensures that the head office maintains the best possible communication links with overseas branches — links that establish fluent communications even when dealing with the most subtle or technical issues. This is a lesson that Shinhan Bank has learned well, and other Korean business leaders would be wise to do the same.