netrashetty
Netra Shetty
Leadership Style at ABB : ABB is a Swiss-Swedish multinational corporation headquartered in Zürich, Switzerland, operating mainly in the power and automation technology areas. It ranked 143rd in Forbes Ranking (2010).
ABB is one of the largest engineering companies as well as one of the largest conglomerates in the world. ABB has operations in around 100 countries, with approximately 124,000 employees,[2] and reported global revenue of $31.6 billion for 2010.[1]
ABB is traded on the SIX Swiss Exchange in Zürich and the Stockholm Stock Exchange in Sweden since 1999, and the New York Stock Exchange in the United States since 2001.[3]
Asea Brown Boveri (ABB) began as a global company in 1988 when two large
companies (Asea AB of Sweden and BBC Brown Boveri of Switzerland) merged their
electrical engineering and equipment businesses. Percy Barnevik was the company’s first
Chief Executive Officer. According to the history of the company by Dun & Bradstreet’s
Hoover’s.com (2010), Percy crafted a “unique decentralized management structure”
when the company was initially formed. Each of the companies subsidiaries were linked
to their local customers and labor forces. In essence, each company was acting as it’s
own company and appealing to the needs of it’s local customers, workforce and culture.
It would appear even at that time ABB recognized the importance of understanding and
serving the needs of different cultures in different ways from its inception.
Today ABB operates in over 100 countries and is one of the world’s largest engineering
and conglomerate companies. The company has restructured four times since Barnevik’s
original decentralized model and currently operates six primary divisions: Power
Products, Power Systems, Process Automation, Low Voltage Products, Discrete Automation and Motion. It’s interesting to note that the company’s top executive officers
are comprised of an American, a Belgian, two Swiss and a German. With a multi-cultural
history, a significant global reach and a culturally diverse leadership – ABB is truly an
international company.
As mentioned at the beginning of this report, competent leadership is a common
ingredient in successful international companies. Those companies who continue to
invest in leadership training and development (even during difficult economic times) reap
the benefits of continued growth and success into the future. ABB Ltd. was ranked 15
th
among the world’s “Best Companies for Leadership” as reported in an annual
BusinessWeek.com/Hay Group survey (2010). The survey asked over 1,800 individuals
from 740 organizations around the world who they believe are the best companies at
developing leadership at all levels. In a companion article O’Connell (2010) cited three
categories of organizations in the top 20 companies. ABB was given as an example of the
third category described as “collaboration for innovation” companies that “work through
self-organizing project teams and encourage employees to seek new approaches to
solving problems”. This collaborative style of leadership works well for multi-national
companies who integrate leaders and employees from several different cultures to
accomplish their corporate objectives.
When considering the size and scope of a multi-national company like ABB, cultural
challenges seem inevitable. But how do corporate leaders handle these challenges and in
what ways do they effect the company? To gain a better perspective on this, I interviewed ABB’s Chief Executive Officer, Joseph M. Hogan. Mr. Hogan spent 23 year at GE in
several leadership positions prior to accepting his current position at ABB in September
of 2008. Among his many leadership responsibilities at GE, he served as Chief Executive
Officer and President for GE Medical Systems and then later for GE Healthcare. As an
American citizen, Mr. Hogan has worked and lived in The United States, The United
Kingdom as well as Zurich, Switzerland (where he currently resides). Mr. Hogan
provided insightful answers to the following questions about cultural challenges faced by
leaders of multi-national companies.
Reed: Mr. Hogan, what is the biggest challenge you face as a leader of a multinational
company that a leader of domestic corporation would not have to deal with?
Hogan: Breath & scale across the entire business: cultural, financial, logistics, marketing,
incentive systems, tax compliance, etc. When you move offshore from the United States
the complexity scales geometrically not linearly as it would if you just stayed and grew in
the United States or North America.
Reed: Based on your personal experience, do you find different expectations with
respect to your role as a leader from employees of different cultures (i.e. Northern
Europeans are known for wanting to be involved in important decisions while Latin
Countries and India expect decisive actions from the top with minimum discussion)? If
so, can you give me an example of how you have overcome these challenges? Hogan: This is true. The first key is to understand this and be sensitive to it. In addition a
leader needs a strong team in the country who understands these differences and helps to
direct the leadership teams.
I cannot say we always overcome these challenges. Sometimes I say we do and other
times we fall over them. An example would be in setting goals and objectives. Setting
stretch goals in the United States can be easy - people understand they can reach for the
goal and win if they achieve it. In Japan and India goal attainment becomes a matter of
saving face. The teams in these regions can often push too hard and cause compliance
issues in revenue recognition, FCPA (Foreign Corrupt Practices Act) and Anti-trust
issues. As a leader you have to understand this and adjust. As far as decision making goes
- Japan, India and China could not be more different, but you do not have to just play to
the culture. At some point, in an international company's development, we all start to
understand the differences and make slight adjustments that help. Sometimes if someone,
like a new American leader in Europe, comes in and has no idea we just laugh at them
and explain the differences. This can be fun. One example would be - In the United
States if you are trying to drive something new the Americans love new ideas and
programs and quickly become excited and want to move forward without a lot of
convincing. After a few months, when the going gets tough, they often start to ask, “Why
are we doing this”? In Europe they are skeptical of new ideas and new ideas are met with
intense scrutiny. You have to convince them up-front why they should accept the new
idea. If you do, they are great at getting it done and not looking back. In the United States
you have to keep telling them why (it’s important) or they will scatter. The time-line in accomplishing this for both cultures can be just as long - but the way you get it done is
much different
Reed: Employees from different cultures are motivated by different incentives. Americans
tend to be motivated primarily by financial incentives based on a personal reward
system. Other areas like Asia and Europe are motivated by a team reward system and
different incentives. Does your company find it necessary to incentivize employees
differently depending on their country of employment? If so in what ways?
Hogan: Yes - this is true. Sometimes it is a culture like in Japan or sometimes it is the tax
system like in Sweden and others. We use financial incentives in all of these countries but
modify them based on region or country. Examples would be less cash more stock, more
formal recognition, company cars rather than cash (because of tax differences).
Incentives are all over the board. Europe is the most difficult since it has more GNP
(Gross National Product) spread across more diverse cultures than any other region in the
world. We use consulting companies like Hay Group to help bench-mark regions and
countries to be sure we are in line with industry practices.
Reed: And for my last question, do you see any differences in leading a corporation from
the United States, England or Switzerland?
Hogan: For sure. First, governance systems - “Chairman” and “CEO” roles and their
responsibilities are legally different in these countries. Union relationships and it’s impact
on governance is huge in Germany, Belgium, France etc. In Germany co-determination
legislates that union representatives sit on the board. This changes the whole context of how a board decides and communicates. In Switzerland & the United Kingdom the CEO
and Chairman are separate roles with operations and strategy treated differently at times.
These are things many Americans, even that have lived overseas and work for American
companies, never really understand about their competitors - and how they run their
companies. It can mean a lot.
Reed: Joe, Thank you so much for your time and perspective on these important
Intentional Leadership issues!
Based on Mr. Hogan’s responses it is clear that ABB’s leadership and corporate
philosophy allows for cultural differences and recognizes the strengths that different
cultures can bring to a company. In discussing the differences between American and
German employees, Hogan noticed that Americans accept new ideas more quickly than
Germans (demonstrating strength of adaptability in Americans). However Germans are
more likely to bring a new idea (once they accept it) through to completion without
further encouragement (demonstrating the strength of tenacity in Germans).
Hogan also discusses the importance of understanding cultural differences and remaining
sensitive to these differences. To accomplish this, he recommends that a company
assemble a strong team that understands the culture and who can “direct” the company’s
leadership into making the best choices in light of these cultural differences.
The last observation from Mr. Hogan’s interview was that he recognizes the need to be
culturally flexible without sacrificing the character of your company. He points out that even though China, India and Japan could not be more different in terms of what they
expect from their leaders, a company can begin to understand those differences and make
adjustments for the differences without “just playing to the culture”. This highlights the
fact that a companies should adapt to different cultures without radically changing the
way the company conducts business in different countries.
It appears that ABB, Ltd and its CEO have adopted what Greenleaf (1970) calls a
“Servant-Leadership” style in adapting to the many cultures of its employees. According
to Greenleaf, the Servant-Leadership management style is one where “leading” and
“serving” are in harmony. Trompenaars and Voerman, (2010) state that these seemingly
opposite concepts can be achieved together if the leader holds true to the universal
principal of helping others. As a leader you need to understand the employee and accept
them from whatever point they are at in their cultural background. You need to “serve”
them by providing the training and tools they need to achieve their personal goals and
your corporate goals.
To Summarize, a Servant Leader has the ability to understand, adapt and capitalize on the
strengths of different cultures rather than simply imposing the morays of a single culture
throughout the organization. This style of leadership can have a positive impact on
corporate results - something that ABB and their CEO have experienced..
ABB is one of the largest engineering companies as well as one of the largest conglomerates in the world. ABB has operations in around 100 countries, with approximately 124,000 employees,[2] and reported global revenue of $31.6 billion for 2010.[1]
ABB is traded on the SIX Swiss Exchange in Zürich and the Stockholm Stock Exchange in Sweden since 1999, and the New York Stock Exchange in the United States since 2001.[3]
Asea Brown Boveri (ABB) began as a global company in 1988 when two large
companies (Asea AB of Sweden and BBC Brown Boveri of Switzerland) merged their
electrical engineering and equipment businesses. Percy Barnevik was the company’s first
Chief Executive Officer. According to the history of the company by Dun & Bradstreet’s
Hoover’s.com (2010), Percy crafted a “unique decentralized management structure”
when the company was initially formed. Each of the companies subsidiaries were linked
to their local customers and labor forces. In essence, each company was acting as it’s
own company and appealing to the needs of it’s local customers, workforce and culture.
It would appear even at that time ABB recognized the importance of understanding and
serving the needs of different cultures in different ways from its inception.
Today ABB operates in over 100 countries and is one of the world’s largest engineering
and conglomerate companies. The company has restructured four times since Barnevik’s
original decentralized model and currently operates six primary divisions: Power
Products, Power Systems, Process Automation, Low Voltage Products, Discrete Automation and Motion. It’s interesting to note that the company’s top executive officers
are comprised of an American, a Belgian, two Swiss and a German. With a multi-cultural
history, a significant global reach and a culturally diverse leadership – ABB is truly an
international company.
As mentioned at the beginning of this report, competent leadership is a common
ingredient in successful international companies. Those companies who continue to
invest in leadership training and development (even during difficult economic times) reap
the benefits of continued growth and success into the future. ABB Ltd. was ranked 15
th
among the world’s “Best Companies for Leadership” as reported in an annual
BusinessWeek.com/Hay Group survey (2010). The survey asked over 1,800 individuals
from 740 organizations around the world who they believe are the best companies at
developing leadership at all levels. In a companion article O’Connell (2010) cited three
categories of organizations in the top 20 companies. ABB was given as an example of the
third category described as “collaboration for innovation” companies that “work through
self-organizing project teams and encourage employees to seek new approaches to
solving problems”. This collaborative style of leadership works well for multi-national
companies who integrate leaders and employees from several different cultures to
accomplish their corporate objectives.
When considering the size and scope of a multi-national company like ABB, cultural
challenges seem inevitable. But how do corporate leaders handle these challenges and in
what ways do they effect the company? To gain a better perspective on this, I interviewed ABB’s Chief Executive Officer, Joseph M. Hogan. Mr. Hogan spent 23 year at GE in
several leadership positions prior to accepting his current position at ABB in September
of 2008. Among his many leadership responsibilities at GE, he served as Chief Executive
Officer and President for GE Medical Systems and then later for GE Healthcare. As an
American citizen, Mr. Hogan has worked and lived in The United States, The United
Kingdom as well as Zurich, Switzerland (where he currently resides). Mr. Hogan
provided insightful answers to the following questions about cultural challenges faced by
leaders of multi-national companies.
Reed: Mr. Hogan, what is the biggest challenge you face as a leader of a multinational
company that a leader of domestic corporation would not have to deal with?
Hogan: Breath & scale across the entire business: cultural, financial, logistics, marketing,
incentive systems, tax compliance, etc. When you move offshore from the United States
the complexity scales geometrically not linearly as it would if you just stayed and grew in
the United States or North America.
Reed: Based on your personal experience, do you find different expectations with
respect to your role as a leader from employees of different cultures (i.e. Northern
Europeans are known for wanting to be involved in important decisions while Latin
Countries and India expect decisive actions from the top with minimum discussion)? If
so, can you give me an example of how you have overcome these challenges? Hogan: This is true. The first key is to understand this and be sensitive to it. In addition a
leader needs a strong team in the country who understands these differences and helps to
direct the leadership teams.
I cannot say we always overcome these challenges. Sometimes I say we do and other
times we fall over them. An example would be in setting goals and objectives. Setting
stretch goals in the United States can be easy - people understand they can reach for the
goal and win if they achieve it. In Japan and India goal attainment becomes a matter of
saving face. The teams in these regions can often push too hard and cause compliance
issues in revenue recognition, FCPA (Foreign Corrupt Practices Act) and Anti-trust
issues. As a leader you have to understand this and adjust. As far as decision making goes
- Japan, India and China could not be more different, but you do not have to just play to
the culture. At some point, in an international company's development, we all start to
understand the differences and make slight adjustments that help. Sometimes if someone,
like a new American leader in Europe, comes in and has no idea we just laugh at them
and explain the differences. This can be fun. One example would be - In the United
States if you are trying to drive something new the Americans love new ideas and
programs and quickly become excited and want to move forward without a lot of
convincing. After a few months, when the going gets tough, they often start to ask, “Why
are we doing this”? In Europe they are skeptical of new ideas and new ideas are met with
intense scrutiny. You have to convince them up-front why they should accept the new
idea. If you do, they are great at getting it done and not looking back. In the United States
you have to keep telling them why (it’s important) or they will scatter. The time-line in accomplishing this for both cultures can be just as long - but the way you get it done is
much different
Reed: Employees from different cultures are motivated by different incentives. Americans
tend to be motivated primarily by financial incentives based on a personal reward
system. Other areas like Asia and Europe are motivated by a team reward system and
different incentives. Does your company find it necessary to incentivize employees
differently depending on their country of employment? If so in what ways?
Hogan: Yes - this is true. Sometimes it is a culture like in Japan or sometimes it is the tax
system like in Sweden and others. We use financial incentives in all of these countries but
modify them based on region or country. Examples would be less cash more stock, more
formal recognition, company cars rather than cash (because of tax differences).
Incentives are all over the board. Europe is the most difficult since it has more GNP
(Gross National Product) spread across more diverse cultures than any other region in the
world. We use consulting companies like Hay Group to help bench-mark regions and
countries to be sure we are in line with industry practices.
Reed: And for my last question, do you see any differences in leading a corporation from
the United States, England or Switzerland?
Hogan: For sure. First, governance systems - “Chairman” and “CEO” roles and their
responsibilities are legally different in these countries. Union relationships and it’s impact
on governance is huge in Germany, Belgium, France etc. In Germany co-determination
legislates that union representatives sit on the board. This changes the whole context of how a board decides and communicates. In Switzerland & the United Kingdom the CEO
and Chairman are separate roles with operations and strategy treated differently at times.
These are things many Americans, even that have lived overseas and work for American
companies, never really understand about their competitors - and how they run their
companies. It can mean a lot.
Reed: Joe, Thank you so much for your time and perspective on these important
Intentional Leadership issues!
Based on Mr. Hogan’s responses it is clear that ABB’s leadership and corporate
philosophy allows for cultural differences and recognizes the strengths that different
cultures can bring to a company. In discussing the differences between American and
German employees, Hogan noticed that Americans accept new ideas more quickly than
Germans (demonstrating strength of adaptability in Americans). However Germans are
more likely to bring a new idea (once they accept it) through to completion without
further encouragement (demonstrating the strength of tenacity in Germans).
Hogan also discusses the importance of understanding cultural differences and remaining
sensitive to these differences. To accomplish this, he recommends that a company
assemble a strong team that understands the culture and who can “direct” the company’s
leadership into making the best choices in light of these cultural differences.
The last observation from Mr. Hogan’s interview was that he recognizes the need to be
culturally flexible without sacrificing the character of your company. He points out that even though China, India and Japan could not be more different in terms of what they
expect from their leaders, a company can begin to understand those differences and make
adjustments for the differences without “just playing to the culture”. This highlights the
fact that a companies should adapt to different cultures without radically changing the
way the company conducts business in different countries.
It appears that ABB, Ltd and its CEO have adopted what Greenleaf (1970) calls a
“Servant-Leadership” style in adapting to the many cultures of its employees. According
to Greenleaf, the Servant-Leadership management style is one where “leading” and
“serving” are in harmony. Trompenaars and Voerman, (2010) state that these seemingly
opposite concepts can be achieved together if the leader holds true to the universal
principal of helping others. As a leader you need to understand the employee and accept
them from whatever point they are at in their cultural background. You need to “serve”
them by providing the training and tools they need to achieve their personal goals and
your corporate goals.
To Summarize, a Servant Leader has the ability to understand, adapt and capitalize on the
strengths of different cultures rather than simply imposing the morays of a single culture
throughout the organization. This style of leadership can have a positive impact on
corporate results - something that ABB and their CEO have experienced..
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