Archive for year: 2023

TATA MOTORS’ TALENT MANAGEMENT FAST TRACK SELECTION SCHEME (A)

Dr. Tripti Singh, Ritu Waila and Dr. Gayatri Phadke wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality.

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Copyright © 2015, Richard Ivey School of Business Foundation Version: 2015-07-03

On a late Friday afternoon in 2010 in Mumbai, Prabir Jha, senior vice-president and chief human

resources officer of Tata Motors Limited (Tata Motors), held his gaze on the bright young engineer Neel

Prakash seated in his office. Prabir listened to Neel and finally said, “I know your mind is made up, and I

can’t say I don’t understand your reasons,” and then, adding an extra bit of warmth, “But, we really don’t

want to lose you.” It had been at Prabir’s urging that Neel had withdrawn his resignation a couple of

months earlier. He held Prabir in very high esteem. But on that day, Neel spoke avoiding Prabir’s gaze, “I

have already accepted the other offer. Anyway, it is time I move on.” Then, sensing Prabir’s thoughts, he

looked directly into his eyes, “I have thought about this a lot, and to be honest, I see no future for me

here!”

Prabir exhaled slowly. An unplanned departure was always bad news, but this one stuck out. Neel had

been with Tata Motors for over five years and was at the top of his game. Intelligent, young, ambitious

and passionate, he had recently participated in the organization’s high potential identification program —

the Fast Track Selection Scheme1 (FTSS). Prabir remembered thinking to himself at that time, “He

definitely has the potential to make it.” He was taken aback when Neel did not make it. Neel had made it

through the entire selection process, but was unfortunately knocked out in the last stage. What went

wrong? Did Neel’s failure to qualify in the last round point fingers at the inefficacy of the FTSS selection

process? Would Prabir be right in doubting the selection process that was adopted by other Tata Group

companies as a benchmark in high potential identification? (See Exhibit 1.)

NEED FOR CHANGE?

Prabir tapped on the door of his chief learning officer, Vikram Bector. “I’m guessing you saw Neel’s

resignation,” said Prabir. Vikram nodded and then said, “Employees leave for all kinds of reasons.”

1 The fast track selection scheme (FTSS), a home-grown flagship succession planning program which had run for close to 20 years and had alumni occupying some of the best roles in the organization. The selection process was a rigorous annual effort which boasted of a success rate of less than 0.5 per cent giving it a highly sought-after and elite status. Once selected in the scheme, the employee was awarded a 10 to15-year career jump, development inputs and challenging assignments.

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“Absolutely,” replied Prabir, “In Neel’s case, however, the reason is very clear. It is his opinion that not

qualifying as a high potential leaves him with very few options at Tata Motors. Worth thinking about,

don’t you agree? How often have we evaluated the robustness of our talent initiatives? How do we know

that they are giving the desired outcome? Take the FTSS for example. Other than a few minor changes

over the years, it is pretty much the same process that was designed 20 years ago! But hasn’t the

definition of talent evolved over the last twenty years? Our business needs have changed; the scenario in

which we operate has transformed.”

Vikram nodded in agreement. He was well aware that focusing on talent as a strategic asset would serve

as a competitive advantage for Tata Motors’ future success. Finally, he spoke, “I agree. But aren’t FTSS

alumni contributing in some of the most critical roles in the organization today? Some of the best

innovations have come from them. They have proven themselves time and again as the new leadership

face of Tata Motors.”

Prabir interjected, “Well, but can we quantify how the program has delivered on the promise that it began

with? For 20 years the organization has rigorously spent time, effort and money in identifying and

developing the leaders of tomorrow. Do we have the metrics or processes to evaluate if our development

investments are in the right areas? What concerns me is that in times of increasing leadership needs, will

we face a shortage of leaders when we need them the most?”

“Hmmm,” reflected Vikram. “I am reminded of an article2 I read sometime back. It talked about how at

any given time organizations operate in a perpetual state of escalating managerial expectations. An

acceptable manager yesterday will not be acceptable today, and today’s manager will not be good enough

for the future. Think about it . . . we are still using the same set of selection criteria defined in 1991! The

organization has grown, business environment has changed and employees have also evolved. Is it time to

rethink our selection criteria and tools?”

“Vikram, these were my thoughts exactly! And I am not looking for quick fix solutions or answers right

now. But I think it is important to take a fresh look at our talent efforts — starting with the FTSS. I need

to rush into a meeting, but we need to pick our brains collectively and see what is working and what is

not. Can you put your thoughts around this and discuss with me sometime early next week?”

THE LAY OF THE LAND — AN INDUSTRY PERSPECTIVE

In the fiscal year 2012/13, Tata Motors Limited was among the largest automobile manufacturing

companies in the world by volume, with a presence across a wide range of passenger cars and commercial

vehicles in the marketplace. The business comprised two marquee British brands — Jaguar and Land

Rover.3 With consolidated revenues of around INR1,888.18 billion4 in fiscal year 2012/13,5 it was a

market leader in commercial vehicles, among the top three manufacturers of passenger vehicles in India

and the world’s fourth largest truck and bus manufacturer. Established in 1945, Tata Motors’ presence cut

across the length and breadth of India. The company’s manufacturing base in India was spread across

Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand),

2 Charles P. Bowen, Jr., “Let’s Put Realism into Management Development,” Harvard Business Review, Volume 51, Issue 4,

July – August 1973, pp. 80-87. 3 Tata Motors Annual report 2011-2012, http://tatamotors.com/investors/financials/67-ar-html/designed_to_deliver.html, accessed July 15, 2013. 4 All currency amounts are in Indian Rupees (INR) unless otherwise specified. 5 Tata Motors 68th Annual Report 2012-13 Directors Report, http://tatamotors.com/investors/financials/68-ar- html/dir_rep.html, accessed July 15, 2015.

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Sanand (Gujarat) and Dharwad (Karnataka). By 2013, Tata Motors had emerged as an automobile

company of global repute, spanning 129 countries across six continents. Through operations, research and

development, a robust dealership network and exports, Tata Motors had established itself among India’s

largest multinational companies.

The Indian economy, which recorded a growth rate of 8.6 per cent during the fiscal year (FY) 2010/11,

started showing softening indicators in the second half of FY 2010/11. This was mainly due to

inflationary pressures and continued anti-inflationary monetary stance taken by the Reserve Bank of

India. High inflation, higher crude oil prices, lower net capital inflows and lower export growth due to

worsening global economic scenario had adversely affected the Indian currency. The automotive industry

was also affected by the overall macroeconomic factors discussed above.

Further, improved infrastructure and robust growth prospects compared to other mature markets were

attracting a number of automotive original equipment manufacturers (OEMs) to India. The global

competitors brought international experience, global scale, advanced technology and significant financial

support for the operations in India, thereby intensifying the competition.6 The competitive scenario

intensified further as the existing OEMs launched new variants to protect market share and the new

entrants sought to gain a foothold in the market.

It was six months since Prabir had joined Tata Motors. New to the automobile sector, he was still learning

and discovering the challenges in his new role. Typical to most manufacturing setups, Tata Motors still

functioned in a traditional, formal and hierarchical manner. Prabir quickly gathered that the number one

impediment facing Tata Motors was the absence of a robust talent pool from which to select future

leaders. With more jobs chasing fewer people, it was a challenge holding on to promising employees.

THE WORD ON THE STREET

Engineers Ganesh Gandhi and Karan Sharma were 150 kilometres away at the Tata Motors

manufacturing plant. They were seated in the cafeteria having lunch and looked forlorn having just read

the farewell note from Neel. Ganesh said, “Three attempts . . . and he made it to the penultimate round all

three times.” He lowered his voice a little, “I hear he got a much better offer at our competitor. A four to

five level jump!”

Vishwas Kumar, a colleague, could not help overhearing as he walked past them. “Good for him,” he

said, “And he is not the only one. Given a chance, I know many who think like him. For over three years I

have been told by HR [human resources] that I am in the talent pool. Frankly, I am getting uncomfortable

now . . . nothing is happening! I have tried telling this to HR but nobody wants to listen.”

Karan shook his head. “I don’t agree guys. How can you say such things! We all joined Tata Motors as

graduate engineer trainees (GETs). I remember, for me, a job at Tata Motors was what I aspired for! I am

sure you all shared this view. The opportunity to work in the biggest automotive company in India! Don’t

lose track of that!”

Vishwas replied, “That was then, Karan. Now, I realize how top heavy the organization is. I look above

me and don’t find anything exciting. The prospect of waiting for a fixed number of years to be promoted

does not motivate me. What else could Neel have done? Is there any other option for recognition other

than FTSS? It is so frustrating!”

6 Tata Motors Annual report, 2011-2012, http://tatamotors.com/investors/financials/67-ar-html/designed_to_deliver.html,

accessed July 2, 2013.

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“But guys, look at Sanjeev Tanwar. He too was a GET like us. He has managed to do very well for

himself in Tata Motors,” said Karan.

Lost in conversation, they did not realize when Smriti Pandey and Payal Kundu joined them. Grasping

that the conversation was around Neel’s resignation, Payal said, “Everyone around Neel knows that he

was unsuccessful for three years in the FTSS selection. Nobody really cares that he lost only in the last

round. You either make it or come back to pick up the pieces.”

Ganesh added, “I can only imagine his plight in his department! For three years his manager kept him out

of any key projects fearing he would leave midway if selected.”

“I agree,” said Smriti, “You don’t even get feedback on where you need improvement. I tried asking HR

so many times on what areas I need to work on so that I can be successful in the next FTSS selection, but

nothing constructive ever comes from them.”

Ganesh frowned and said, “I wonder how much more Neel is making now?” It was anybody’s guess what

was going on in his mind.

THE PEARLS AND PERILS OF FTSS BRAND

A few weeks later, Vikram called his team members Aditi Agarwal and Kapil Bhatia for a team meeting

in his office. After his meeting with Prabir, Vikram had formed a task force to look into the FTSS

process. The team included himself, his direct reports and a small group of external experts who were

there to ensure objectivity and high standards and to help provide a third party unbiased assessment. The

task force members took nothing for granted.

Aditi handed Vikram a report saturated with charts and metrics. It also included sound bites from a

random sample of FTSS employees, aspirants, employees who did not get selected and managers who

worked with FTSS employees. The task group also interviewed ex-employees of Tata Motors — those

who were FTSS employees in the past and also those who left because they did not clear the selection

process. Analyzing the perspectives from this broad spectrum would be one small step towards separating

the signal from the noise in revamping FTSS.

Aditi sat across from Vikram’s desk and was the first to speak. “Let me give you the good news first,” she

said. “Take a look at this pie chart. About 68 per cent of employees pitched FTSS as the best avenue for

fast succession in the organization. Over 83 per cent of managers believe that FTSS candidates are a cut

above the rest.” She paused and then added, “This is what some employees had to say:

‘I am grateful that the organization has faith in me. It motivates me to set higher goals for

myself.’

‘When the executive director comes and talks to you or reviews with you what he thinks, you do

get that importance and sense of achievement.’

‘It changes your orbit completely. FTSS is no doubt an achievement; but also an opportunity.

Success comes later . . . with your own efforts.’”

“This speaks a lot on the positive impact of FTSS on engagement, aspiration and motivation,” said Aditi.

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“And the rest of this report is all bad news?” quipped Vikram.

“Well, not exactly . . . but definitely enough food for thought,” continued Aditi. “I have collated the

information into logical buckets. Take a look.”

Vikram glanced through the pages of the report. “Great work guys. It is useful to have this information.

Aditi, can you talk in brief about each of these subheadings?”

“Certainly,” replied Aditi, “and Kapil, feel free to interrupt me if you remember something I may have

missed.”

SELECTION OF RISING STARS

Opening the first slide, Aditi began, “The first section is on selection and identification of high potentials.

There is lot of overlap in the common aptitude test (CAT) for MBA entrance exams and FTSS. For all

those who have been somewhat serious about preparing for CAT, cracking the online test gets easier.

Older employees think the test is skewed in favour of younger employees who are preparing for CAT.

Similarly, non-MBAs think that lateral MBA hires have the experience with the assessment centre

activities, thus giving them undue advantage.” (See Exhibit 2.)

Kapil added,

Which leads me to think, why should the written test be the first elimination round? Has it been

scientifically validated? Also, why should all the sections of the written test carry equal

weightage? Is there any study to correlate test results/weightage to the skills and competencies

needed in a future leader? I have also heard some senior employees and non-engineers grumble

over quantitative techniques. They believe that quantitative ability is becoming the decisive factor

for success or failure in the first round. One of them said, “We need quantitative ability only at a

very basic level at our work, why is it given so much of importance for success as a manager?”

Shouldn’t the focus be on data analysis and not on pure mathematics?

Aditi responded, “I too have heard this from senior employees. There is a feeling that mathematical

ability depends on regular practice and the young engineers and MBAs are on a better platform than many

who have worked longer and are no longer in touch with these tests.”

Vikram was analyzing the data in front of him (see Exhibit 3). There was a big jump in the number of

applicants in 2010/11. Was this because the eligibility criterion for FTSS was relaxed from TM2 to TM1?

(See Exhibit 4.) Pointing to those numbers, Vikram remarked,

Are we opening up FTSS too early to the young graduates? Will an employee who has worked

for less than two years with our organization have the basic foundation of a future leader?

Whether it is functional knowledge or understanding our culture or the emotional maturity needed

at a senior level . . . won’t this only come from experience?

“I agree. Isn’t it also too early to ask them to make a choice in the direction they wish to grow — choose

between commercial management, operations management and general management? Are we

compartmentalizing them too early without even giving them a chance to find their area of interest?”

pondered Kapil.

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“I see where you are going with that,” said Aditi. “If you look at the numbers, close to 70 per cent of the

applicants are from TM1 and TM2 grade. Why are people with more work experience in the organization

not applying?”

“Which leads me to think,” said Kapil, “Should there be some weightage for tenure in the organization?

After all, it reflects on commitment and higher understanding of our values and goals. Also, wouldn’t the

probability of a solid citizen sticking around be higher?”

“Let’s make a note of it,” replied Vikram. After a while, Vikram continued, “Another disturbing update I

hear is the burgeoning of official practice clubs across locations to train and prepare employees for the

written test. Now that is appalling! If the test is being gamed, is it time to change the rules?”

“That only means that we need to stay a step ahead in the game,” said Aditi. “I know it means more work

for us, but our selection format should surprise them every year.”

“The problem with that would be to maintain rigour and consistency in selection over the years,” said

Kapil.

Vikram had to pause the meeting to answer a phone call. Aditi and Kapil took this opportunity to

correlate their notes on the next discussion thread.

DEVELOPING RISING STARS TO CAPABLE LEADERS

Following the pause to answer the phone call, Vikram motioned them to continue. Aditi said,

Moving on, our next section in the survey covered the adequacy of the developmental

opportunities provided to fast trackers. Apart from the fast trackers currently in the organization,

the task force also reached out to ex-employees who had been fast trackers. Both sets of people

overwhelmingly agreed that their status increased their commitment to the organization and

motivation. However, the common denominator for disillusionment was lack of a structured

proactive development plan and compensation not in line with others in that grade. In their

words:

‘We had that initial opportunity but future mobility within the organization is not there.’

‘Post final placement, there is continual learning for the next four to five years. But after that, the

job becomes routine and complacency sets in. If the organization does not recognize that, FTSS

employees will begin actively seeking other opportunities outside the company.’

‘You are given no inputs. Instead you are put into a sea and you learn how to swim. We need

some tools and equipment to swim through safely and smoothly.’

‘After the final placement, everything is forgotten. There is no career planning. The company is

not using its FTSS talent.’

‘I moved from the service function to marketing after selection. There was my own knowledge

challenge, territory challenge, a little bit of language challenge. And that was a miserable time I

would say . . . those six months were really tough for me. I had no functional knowledge inputs or

Page 7 guidance to help me understand the culture and politics. Sometimes learning does not look like 100 per cent success and the pressure of my FTSS title put a lot of strain on me.’

Compensation-related disillusionment:

‘Perks that came with the grade jump were good but the quantum of salary jump was

insignificant.’ ‘Tata Motors had a strange process; they give salary hikes in slabs so that is probably the most

unscientific PMS [performance management system] I have ever seen. The salary is not

commensurate with the grade.’” (See Exhibit 5.)

“All these responses make me wonder, how much hand-holding should an organization do and for how

long? FTSS gives them the initial jump. What after that? Is it the organization’s responsibility to help

them navigate up the hierarchy?” Vikram thought aloud.

Aditi looked appalled, “But sir, when we have put in so much time, effort and money in selecting and

preparing them, it is in our own interest to make sure they deliver! Is a year-long development program

enough to prepare them for their new roles? Is it worth taking the risk of moving an unprepared employee

to a position of such high responsibility?”

Vikram replied,

Yes, the stakes here are really high, Aditi. I am glad you agree. But do we know what needs to be

developed as they climb up the corporate ladder? Do we have regular interventions to identify

their skill gaps? If not, then how does one know what is blocking their progress? What they really

need after this big career jump is mentoring and coaching support to cope with the new

challenges, pressure and expectations.

Both Kapil and Aditi agreed. Vikram thumped the table,

And without that kind of support, Aditi, even the most promising young executive will feel

disillusioned. And, why would all fast trackers need the same kind of development? A one-size-

fits-all approach to development of these young fast trackers will not work. Do you see how it ties

back to the initial concern I raised about selection? Is our selection and development process out

of date?”

“Sir, speaking on disillusionment, I am quoting from my informal interactions with my batchmates,”

pitched in Kapil.

One of the biggest motivators for applying for FTSS is the opportunity to move from a technical

role to glamorous functions like sales, marketing or corporate planning — roles that will help

them move to the corporate office. It bothers me that the FTSS graduate’s judgment is clouded by

these perceptions of growth prospects, glamor, visibility, etc.

“Rightly said, Kapil. It also raises another concern. Are we oversaturating the leadership pipeline for

corporate roles? Will we have adequate leaders in the plants?” said Aditi. Vikram smiled,

Page 8 A very valid point. How do we leverage their skills? It all comes down to finding the right

balance between aspiration and business need. It is a tricky situation to be in. If we focus only on

the business need, we risk losing these high-fliers. But if we cater solely to their aspiration, we

end up with an inadequate talent pipeline.”

Aditi was deep in thought. Tapping her pen on her chin, she commented, “Do we come across as a

confused organization? While recruiting we assess an individual for certain functional knowledge and

skills, and then within a year we motivate them to move out of their core strength area.”

“Well in my opinion,” said Vikram playing along, “FTSS exists to create future business leaders. Does

that answer your question?”

“But won’t we need leaders in the core functional areas too?” asked Kapil. “An employee who aspires to

pursue a functional career path could perceive FTSS as a deterrent and hence never apply.”

Aditi added,

Talking about glamorous functions, another perception is that FTSS is very India-centric. We are

a global organization and our aspiration is definitely to become much stronger in the geographies

we already are in and enter new geographies as well. Therefore, shouldn’t global outlook be part

of the assessment process and continue in terms of project and placement?

“And by extension,” volunteered Kapil, “Should there be a plan to include our international subsidiaries

in this scheme?”

“I hear what you two are telling me. However, this might be a complex undertaking. The assessments

need to be culturally and legally appropriate and equivalent across cultures,” said Vikram.

IS IT REALLY DO OR DIE?

Flipping the page, Kapil made the next point, “I have informally heard from my friends who are in

different departments that they are just waiting for the FTSS results. If they get through FTSS they will

stay on, if not they are already looking for other options.”

Aditi nodded her head in agreement. “It is a common perception among the TM1 and TM2 levels that

FTSS is the only stairway to heaven at Tata Motors. Employees feel that failure to crack FTSS means a

long path to reach the top. They prefer to leave rather than stay. To quote one employee:

I have gone to final round of Tata Administrative Service. I have gone to the final round of FTSS.

It means I cannot be a very bad guy. I have cleared the development centre with very high grades.

Then why am I still being treated like a normal employee? There is nothing. It is a binary

decision — you are a FTSS or you are a loser.

Aditi added, “More so, there is a perception that failure changes how others in the organization view

you.” She brought attention to what one employee shared: “There is a feeling of not being appreciated, of

being undervalued. In the sense you are looked upon as if you have failed.”

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“Wait a second,” Vikram interrupted, “but what about the other avenues like the development centres and

talent pool?”

“Our survey addressed those as well,” replied Aditi. “Again the opinion here is not great. Employees feel

that these initiatives have not really picked up momentum. They are yet to see tangible outcomes from

these initiatives. They feel that these programs are taking too long, thus leaving them confused.”

The conversation was getting really interesting. Vikram felt a sense of pride hearing their intelligent

arguments and varied perspectives. The untouched tea cups were a testament to how engrossed they were.

This was exactly what he was hoping for — young minds ready to challenge and question the status quo.

MEASURING PROGRAM EFFECTIVENESS

Vikram’s secretary knocked on the door. They had not realized that it was well after office hours. “Are

you planning on working through dinner,” she asked. Vikram asked Aditi and Kapil to wrap up the

meeting. “Anything else on the list?”

Aditi responded:

Well, just one more point. [The] majority of the employees have complained that the cycle time

for [the] FTSS process is too long. The circular comes out in December and the final

announcements are made in July. Ambiguity on when the results will be announced leaves the

employees anxious and frustrated. I think what the employees have said in this regard is self-

explanatory:

“The wait has adversely affected my performance grading. Fully aware that there is a chance I

will leave the department if I succeed in FTSS, my manager has denied me all good projects this

year. My motivation has come down and so has my performance rating . . .”

Vikram said, “This should be addressed immediately. Participants should be kept informed at every stage.

Waiting for too long in anticipation is not good for them or the organization. This is a developmental

process . . . let’s not lose focus of that.”

He added, “Any thoughts on what parameters we could use to measure the effectiveness of FTSS? I’ll

need some data points to present to Prabir. The way I see it, the measures should be around program cost

and benefit, development relevance and impact and workforce outcomes like retention.”

“Also,” added Aditi, “the extent to which important functions have been filled internally? We will think

of some more.”

“But not too many . . . have you heard the phrase weighing the pig won’t make it fatter . . . Pick a few

relevant metrics. Great job, team. Get me this data by the end of this week. Goodnight!” said Vikram.

Throughout the ride back home, Vikram wondered whether they were on the right track. What he was

clear about was that FTSS had to be realigned to deliver the correct workforce outcomes. The question

was how?

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EXHIBIT 1: OVERVIEW OF FAST TRACK SELECTION SCHEME

The fast track selection scheme is a bench mark program aimed at providing a unique opportunity for employees to accelerate the pace of their careers at Tata Motors. It evaluates individuals on their managerial and leadership qualities and provides a platform to develop and explore new avenues within the company and across subsidiaries. The program encapsulates intensive training, educational inputs and rotational assignments.

Employees can choose all or any of the following three streams within the FTSS scheme:

Executive selection scheme (ESS): This focuses on general management competencies and is suitable for placement in any functional area.

Operations managers scheme (OMS): This focuses on operations management competencies and is suitable for placement in plant-based functional areas.

Commercial managers scheme (CMS): This focuses on commercial management competencies and is suitable for placement in sales and marketing areas.

Eligibility Criteria

All employees who meet the following criteria can apply

Details

Tata Motors Ltd. /

TML Drivelines Ltd. / TML Distribution Co.

TAL

Manufacturing Solutions Ltd.

Tata Marcopolo

Motors Ltd.

Concorde

Motors (India) Ltd.

Minimum Education

Qualification

Graduation

Eligible Grade

Band*

TM 1 to TM 4

4B, 4A & 3B

L3 – IV, L3 – V, L2 – I & L2 – II

G, F & E

Minimum Work

Experience

2 years (Minimum 1 year in the company)

Post Graduate Trainees are eligible to apply on completion of one year within the company.

Applicants can choose to apply for any one, any two or all of the options. There is no age limit for the applicants. An applicant can take a maximum of three attempts for selection under the scheme. (Previous appearances for ESS, OMS or CMS are counted as attempts).

Source: Tata Motors’ internal process document, 2012-13.

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EXHIBIT 2: OVERVIEW OF THE SELECTION PROCESS

Selection for FTSS comprises four steps:

Phase 1

Written Test

Phase 2

Group

Discussion and Power Interview

Phase 3 Assessment

Centre

Phase 4

Final Interview

Phase 1: All participants will have to compulsorily attempt two papers irrespective of which scheme they choose:

Details Paper 1 Paper 2

Question-based

Logical Reasoning Quantitative Technique Language Comprehension

Functional Appreciation General Knowledge

Time Duration 2 hours 1 hour

Phase 1 is a computer-based online test. All participants need to compulsorily attempt two papers. All questions are multiple-choice questions with one-fourth negative marking.

Paper 1 comprises an aptitude test (120 questions) and has three sections:

• Quantitative Technique (30 questions)

This section measures the participant’s numerical ability and accuracy in mathematical calculations. It ranges from purely numeric calculations to problems of arithmetic reasoning and includes topics such as ratios, proportion, percentage analysis, allegations and mixtures, equations, probability, statistics and data analysis.

• Language Comprehension (60 questions) This section tests the participant’s competence in communication skills with English as a medium. It includes questions on synonyms, antonyms, analogies, sentence completion/correction and reading comprehension.

• Logical Reasoning (30 questions) This section tests the participant’s ability to understand, comprehend and derive logical conclusions. It includes topics such as syllogisms, analytical reasoning, Venn diagrams, analogies, puzzles and logical reasoning.

Time duration of the paper is two hours. There is no sectional cutoff, but the candidate must get a positive score in each section. This implies a negative score or a score of zero in any section will disqualify the participant.

Paper 2 comprises a knowledge test (80 questions) and has two sections:

• Functional Appreciation (50 questions)

Functional appreciation paper aims at assessing the participant’s knowledge on general management. It includes topics in the areas of operations management, sales and marketing, finance and economics, human resources and information technology (IT).

Operations Management − Logistics, product development and design − Supply chain management − Quality management − Enterprise resource planning

.

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EXHIBIT 2 (CONTINUED)

− Cost management − Production processes (Lean production techniques) − Production planning and scheduling, resource management − Project management

Sales and Marketing − Pricing − Marketing and promotion strategies − Customer relationship management − Dealership management − Brand building, segmentation and targeting − Product life cycle

Finance and Economics − Understanding financial statements — balance sheet, profit and loss statement, cash flow

statement − Working capital management − Managerial costing

Capital budgeting methods — net present value, internal rate of return, payback, etc. − Sources of funds − Risk-return analysis − Law of demand and supply − Pricing under different market structures such as monopoly and perfect competition.

Human Resources − Performance management − Training and development − Industrial relations − Compensation and rewards

IT awareness − Impact of internet and social media on business − IT contribution to the revenue stream of a company − Internet and security threat to the organizations − Social virtualization

• General Knowledge (30 questions)

This section covers a wide variety of topics such as international and domestic current affairs, history and general awareness. This also includes history and current affairs of the Tata Group companies.

Time duration of the paper is one hour and 30 minutes. There is no sectional cutoff, but the candidate must get a positive score in each section. A negative score or a score of zero in any section will disqualify the participant.

Phase 2: Shortlisted candidates attend a round of group discussion and power interviews, which is held across locations.

Phase 3: Shortlisted candidates attend a two-day assessment centre which uses various tools and exercises such as in tray exercises, case study and group task. The panel here represents a cross- location and cross-functional expertise.

Phase 4: Shortlisted candidates will have a round of interview / interaction with the management committee members (MANCOM). Source: Tata Motors Internal Process document, 2012-13.

Page 13

EXHIBIT 3: SOME DATA POINTS

Number of Applications Received over the Years

2000

1500

Total 2062

1000 651 1255

500

0

145 199105 189 224 187 201 439

612

Year

Year-wise Data: FTSS Candidates Selected versus Currently Employed with TML

Year

No. of FTSS Selected

Grade-wise Distribution of FTSS Employees Currently in TML

Currently with TML

Current Grade EG1A EG1B EG2A EG2B EG3 EG4 TM5 TM4

1992 3 1 1

1994 2 0

1996 2 2 1 1

1997 6 3 1 1 1

1998 5 4 1 2 1

1999 7 5 1 2 2

2000 2 2 1 1

2001 5 4 1 3

2002 6 1 1

2003 9 4 1 1 2

2004 3 1 1

2005 8 7 3 4 2006 6 3 1 2 2007 3 2 2 2008 4 3 3 2009 12 11 5 6

2010 14 14 4 10

2011 14 14 4 10 2012 2013

19 19 1 18 9

Total 139 100 ESS : 40 CMS : 35 OMS : 25

2001 – 02

2002 – 03

2003 – 04

2004 – 05

2005 – 06

2006 – 07

2007 – 08

2008 – 09

2009 -1 0

2010-11

2011-12

2012-13

.

Page 14

EXHIBIT 3 (CONTINUED)

Grade-wise Eligible Applications for the Last Four Years

Year TM1 TM2 TM3 TM4 2009-10 198 283 135 35 2010-11 157 268 148 39 2011-12 298 524 356 77 2012-13 298 481 274 82

Successful Candidates at Each Phase for the Last Four Years

Applications received Phase 1 Phase 2 Phase 3 Phase 4

2009-10 651 489 130 59 14 2010-11 612 481 121 54 14 2011-12 1255 975 254 98 19 2012-13 2062 167 64 15 9

Source: Tata Motors Internal Data Base, updated in 2012-13.

EXHIBIT 4: GRADE STRUCTURE AND EXISTING CAREER PATH AT TATA MOTORS

AVERAGE CAREER SPAN FOR TOP 5 TO 10 PER CENT PERFORMERS IN TATA MOTORS

Source: Tata Knowledge Chain – Retaining High Performers – Tata Motors – Fast Track Selection Scheme.

Page 15

EXHIBIT 5: OVERVIEW OF DEVELOPMENT PLAN FOR FAST TRACKERS

Rotational Assignments Selected candidates undergo two rotational assignments of six months each to enhance their breath of experience. They are given an opportunity to work directly with the business unit heads / functional heads. This is followed by a two-month assignment in corporate social responsibility.

Educational Inputs Candidates are provided educational and leadership inputs through premier institutes such as the Indian Institutes of Management and Tata Management Training Centre. Non-MBAs are sent for a capsule MBA program, management essentials program to the Indian Institute of Management, Indore.

Mentoring Enhanced developmental support is provided to the candidate under the Anchor Me initiative.

Placements On successful completion of the rotational assignments, they are given a grade jump to TM5 level (entry level to the executive grade) and placed on critical and challenging roles as per the organizational needs on a full-time basis. They are not placed back in their parent department, hence necessitating a job rotation. Performance is monitored and further training inputs in functional area are provided.

Source: Tata Motors Internal Process document, 2012-13.

Gar Finnvold knew his organization needed to change, to  transform itself over the next two years. His 1,000 employees had enjoyed what amounted to monopoly status. They had been the

exclusive provider of computer support services to the global enterprises of the U.K. based

National Banking Group. All that was about to change. National Bank’s newly appointed chairman had announced that, starting in two years, all bank operations would be free to

purchase their computer services from any vendor who could

supply excellent value. Finnvold’s operation would be competing against the best in Europe.

At the same time, Finnvold would be free to market his computer operations on the outside, to build a customer base external to the bank. Finnvold’s excitement at the challenge of transforming his National Computer Operations (NCO) into a truly world class competitor was matched by his anxiety (see Exhibit 3 6 for a partial organization chart). As the longtime manager of computer operations, he understood only too  well that NCO was unprepared to compete. Internal bank customers had complained for years of the high cost/low responsiveness  culture of the NCO.

EXHIBIT 3

–

6 Partial Organization Chart

National Computer Operations.

Shielded by their monopoly status, NCO’s computer technicians didn’t worry much about

whether the customer perceived them as providing value.

They believed they better understood both what that customer needed  and how much they should be willing to pay for it.

In two years, Finnvold knew that equation would be reversed. Given a free market choice to seek the best provider of computer services, would they continue to use NCO? Not likely, he thought.

At least inside the bank, NCO enjoyed a substantial cost advantage over potential external

competitors. National tax laws exempted bank operations from having to pay a 20 percent tax

on internally provided services. That tax advantage disappeared when NCO left the safety of the

MANAGING TRANSFORMATION AT NATIONAL COMPUTER OPERATIONS

Gar Finnvold knew his organization needed to change, to transform itself over the next two

years. His 1,000 employees had enjoyed what amounted to monopoly status. They had been the

exclusive provider of computer support services to the global enterprises of the U.K.-based

National Banking Group. All that was about to change. National Bank’s newly appointed

chairman had announced that, starting in two years, all bank operations would be free to

purchase their computer services from any vendor who could supply excellent value. Finnvold’s

operation would be competing against the best in Europe. At the same time, Finnvold would be

free to market his computer operations on the outside, to build a customer base external to the

bank.

Finnvold’s excitement at the challenge of transforming his National Computer Operations

(NCO) into a truly world-class competitor was matched by his anxiety (see Exhibit 3-6 for a

partial organization chart). As the longtime manager of computer operations, he understood

only too well that NCO was unprepared to compete. Internal bank customers had complained

for years of the high-cost/low-responsiveness culture of the NCO.

EXHIBIT 3-6 Partial Organization Chart—National Computer Operations.

Shielded by their monopoly status, NCO’s computer technicians didn’t worry much about

whether the customer perceived them as providing value. They believed they better understood

both what that customer needed and how much they should be willing to pay for it. In two years,

Finnvold knew that equation would be reversed. Given a free-market choice to seek the best

provider of computer services, would they continue to use NCO? Not likely, he thought.

At least inside the bank, NCO enjoyed a substantial cost advantage over potential external

competitors. National tax laws exempted bank operations from having to pay a 20 percent tax

on internally provided services. That tax advantage disappeared when NCO left the safety of the

www.hbrreprints.org

Managing Multicultural Teams

by Jeanne Brett, Kristin Behfar, and Mary C. Kern

Included with this full-text

Harvard Business Review

article:

The Idea in Brief—the core idea

The Idea in Practice—putting the idea to work

1

Article Summary

2

Managing Multicultural Teams

A list of related materials, with annotations to guide further

exploration of the article’s ideas and applications

10

Further Reading

Teams whose members come

from different nations and

backgrounds place special

demands on managers—

especially when a feuding

team looks to the boss for help

with a conflict.

Reprint R0611D

Managing Multicultural Teams

page 1

The Idea in Brief The Idea in Practice

C OPY RIGH T© 20 0 7 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION . ALL RIGHTS RESERVED.

If your company does business internation- ally, you’re probably leading teams with members from diverse cultural back- grounds. Those differences can present serious obstacles. For example, some members’ lack of fluency in the team’s dominant language can lead others to underestimate their competence. When such obstacles arise, your team can stalemate.

To get the team moving again, avoid inter- vening directly, advise Brett, Behfar, and Kern. Though sometimes necessary, your involvement can prevent team members from solving problems themselves—and learning from that process.

Instead, choose one of three indirect inter- ventions. When possible, encourage team members to adapt by acknowledging cul- tural gaps and working around them. If your team isn’t able to be open about their differences, consider structural interven- tion (e.g., reassigning members to reduce interpersonal friction). As a last resort, use an exit strategy (e.g., removing a member from the team).

There’s no one right way to tackle multicul- tural problems. But understanding four barriers to team success can help you begin evaluating possible responses.

FOUR BARRIERS

The following cultural differences can cause destructive conflicts in a team:

• Direct versus indirect communication. Some team members use direct, explicit communication while others are indirect, for example, asking questions instead of pointing out problems with a project. When members see such differences as violations of their culture’s communication norms, relationships can suffer.

• Trouble with accents and fluency. Mem- bers who aren’t fluent in the team’s dominant language may have difficulty communicating their knowledge. This can prevent the team from using their expertise and create frustration or perceptions of incompetence.

• Differing attitudes toward hierarchy. Team members from hierarchical cultures expect to be treated differently according to their status in the organization. Members from egalitarian cultures do not. Failure of some members to honor those expectations can cause humiliation or loss of stature and credibility.

• Conflicting decision-making norms. Members vary in how quickly they make decisions and in how much analysis they require beforehand. Someone who prefers making decisions quickly may grow frus- trated with those who need more time.

FOUR INTERVENTIONS

Your team’s unique circumstances can help you determine how to respond to multicul- tural conflicts. Consider these options:

Intervention Type When to Use Example Adaptation: working with or around diff erences

Members are willing to acknowledge cultural diff erences and fi gure out how to live with them.

An American engineer working on a team that included Israelis was shocked by their in-your-face, argumentative style. Once he noticed they confronted each other and not just him—and still worked well together—he realized confrontations weren’t personal attacks and accepted their style.

Structural intervention: reorganizing to reduce friction

The team has obvious subgroups, or members cling to negative stereotypes of one another.

An international research team’s leader realized that when he led meetings, members “shut down” because they felt intimidated by his executive status. After he hired a consultant to run future meetings, members participated more.

Managerial intervention: making fi nal decisions without team involvement

Rarely; for instance, a new team needs guidance in establishing productive norms.

A software development team’s lingua franca was English, but some members spoke with pronounced accents. The manager explained they’d been chosen for their task expertise, not fl uency in English. And she directed them to tell customers: “I realize I have an accent. If you don’t understand what I’m saying, just stop me and ask questions.”

Exit: voluntary or involuntary removal of a team member

Emotions are running high, and too much face has been lost on both sides to salvage the situation.

When two members of a multicultural consulting team couldn’t resolve their disagreement over how to approach problems, one member left the fi rm.

Managing Multicultural Teams

by Jeanne Brett, Kristin Behfar, and Mary C. Kern

harvard business review • november 2006 page 2

C OPY RIGH T© 20 0 7 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.

Teams whose members come from different nations and backgrounds

place special demands on managers—especially when a feuding team

looks to the boss for help with a conflict.

When a major international software devel- oper needed to produce a new product quickly, the project manager assembled a team of employees from India and the United States. From the start the team members could not agree on a delivery date for the product. The Americans thought the work could be done in two to three weeks; the Indi- ans predicted it would take two to three months. As time went on, the Indian team members proved reluctant to report setbacks in the production process, which the Ameri- can team members would find out about only when work was due to be passed to them. Such conflicts, of course, may affect any team, but in this case they arose from cultural differ- ences. As tensions mounted, conflict over de- livery dates and feedback became personal, disrupting team members’ communication about even mundane issues. The project manager decided he had to intervene—with the result that both the American and the Indian team members came to rely on him for direction regarding minute operational

details that the team should have been able to handle itself. The manager became so bogged down by quotidian issues that the project ca- reened hopelessly off even the most pessimis- tic schedule—and the team never learned to work together effectively.

Multicultural teams often generate frus- trating management dilemmas. Cultural dif- ferences can create substantial obstacles to effective teamwork—but these may be sub- tle and difficult to recognize until significant damage has already been done. As in the case above, which the manager involved told us about, managers may create more prob- lems than they resolve by intervening. The challenge in managing multicultural teams effectively is to recognize underlying cul- tural causes of conflict, and to intervene in ways that both get the team back on track and empower its members to deal with future challenges themselves.

We interviewed managers and members of multicultural teams from all over the world. These interviews, combined with our deep

Managing Multicultural Teams

harvard business review • november 2006 page 3

research on dispute resolution and teamwork, led us to conclude that the wrong kind of man- agerial intervention may sideline valuable members who should be participating or, worse, create resistance, resulting in poor team performance. We’re not talking here about re- specting differing national standards for doing business, such as accounting practices. We’re referring to day-to-day working problems among team members that can keep multicul- tural teams from realizing the very gains they were set up to harvest, such as knowledge of different product markets, culturally sensitive customer service, and 24-hour work rotations.

The good news is that cultural challenges are manageable if managers and team mem- bers choose the right strategy and avoid imposing single-culture-based approaches on multicultural situations.

The Challenges

People tend to assume that challenges on mul- ticultural teams arise from differing styles of communication. But this is only one of the four categories that, according to our research, can create barriers to a team’s ultimate suc- cess. These categories are direct versus indi- rect communication; trouble with accents and fluency; differing attitudes toward hierarchy and authority; and conflicting norms for decision making.

Direct versus indirect communication. Communication in Western cultures is typi- cally direct and explicit. The meaning is on the surface, and a listener doesn’t have to know much about the context or the speaker to interpret it. This is not true in many other cultures, where meaning is embedded in the way the message is presented. For example, Western negotiators get crucial information about the other party’s preferences and prior- ities by asking direct questions, such as “Do you prefer option A or option B?” In cultures that use indirect communication, negotiators may have to infer preferences and priorities from changes—or the lack of them—in the other party’s settlement proposal. In cross- cultural negotiations, the non-Westerner can understand the direct communications of the Westerner, but the Westerner has difficulty understanding the indirect communications of the non-Westerner.

An American manager who was leading a project to build an interface for a U.S. and

Japanese customer-data system explained the problems her team was having this way: “In Japan, they want to talk and discuss. Then we take a break and they talk within the organi- zation. They want to make sure that there’s harmony in the rest of the organization. One of the hardest lessons for me was when I thought they were saying yes but they just meant ‘I’m listening to you.’”

The differences between direct and indirect communication can cause serious damage to relationships when team projects run into problems. When the American manager quoted above discovered that several flaws in the system would significantly disrupt com- pany operations, she pointed this out in an e-mail to her American boss and the Japanese team members. Her boss appreciated the direct warnings; her Japanese colleagues were embarrassed, because she had violated their norms for uncovering and discussing prob- lems. Their reaction was to provide her with less access to the people and information she needed to monitor progress. They would probably have responded better if she had pointed out the problems indirectly—for example, by asking them what would happen if a certain part of the system was not func- tioning properly, even though she knew full well that it was malfunctioning and also what the implications were.

As our research indicates is so often true, communication challenges create barriers to effective teamwork by reducing information sharing, creating interpersonal conflict, or both. In Japan, a typical response to direct confrontation is to isolate the norm violator. This American manager was isolated not just socially but also physically. She told us, “They literally put my office in a storage room, where I had desks stacked from floor to ceil- ing and I was the only person there. So they totally isolated me, which was a pretty loud signal to me that I was not a part of the inside circle and that they would communicate with me only as needed.”

Her direct approach had been intended to solve a problem, and in one sense, it did, be- cause her project was launched problem- free. But her norm violations exacerbated the challenges of working with her Japanese colleagues and limited her ability to uncover any other problems that might have derailed the project later on.

Jeanne Brett

is the DeWitt W. Buchanan, Jr., Distinguished Professor of Dispute Resolution and Organizations and the director of the Dispute Resolution Research Center at Northwestern University’s Kellogg School of Management in Evanston, Illinois. Kristin Behfar is an assistant professor at the Paul Merage School of Business at the University of California at Irvine. Mary C. Kern is an assistant professor at the Zicklin School of Busi- ness at Baruch College in New York.

Managing Multicultural Teams

harvard business review • november 2006 page 4

Trouble with accents and fluency.

Although the language of international business is En- glish, misunderstandings or deep frustration may occur because of nonnative speakers’ accents, lack of fluency, or problems with trans- lation or usage. These may also influence perceptions of status or competence.

For example, a Latin American member of a multicultural consulting team lamented, “Many times I felt that because of the lan- guage difference, I didn’t have the words to say some things that I was thinking. I noticed that when I went to these interviews with the U.S. guy, he would tend to lead the interviews, which was understandable but also disappoint- ing, because we are at the same level. I had very good questions, but he would take the lead.”

When we interviewed an American mem- ber of a U.S.-Japanese team that was assessing the potential expansion of a U.S. retail chain into Japan, she described one American team- mate this way: “He was not interested in the Japanese consultants’ feedback and felt that because they weren’t as fluent as he was, they weren’t intelligent enough and, therefore, could add no value.” The team member de- scribed was responsible for assessing one as- pect of the feasibility of expansion into Japan. Without input from the Japanese experts, he risked overestimating opportunities and underestimating challenges.

Nonfluent team members may well be the most expert on the team, but their difficulty communicating knowledge makes it hard for the team to recognize and utilize their ex- pertise. If teammates become frustrated or impatient with a lack of fluency, interper- sonal conflicts can arise. Nonnative speakers may become less motivated to contribute, or anxious about their performance evaluations and future career prospects. The organiza- tion as a whole pays a greater price: Its invest- ment in a multicultural team fails to pay off.

Some teams, we learned, use language dif- ferences to resolve (rather than create) ten- sions. A team of U.S. and Latin American buyers was negotiating with a team from a Korean supplier. The negotiations took place in Korea, but the discussions were conducted in English. Frequently the Koreans would caucus at the table by speaking Korean. The buyers, frustrated, would respond by appear- ing to caucus in Spanish—though they

discussed only inconsequential current events and sports, in case any of the Koreans spoke Spanish. Members of the team who didn’t speak Spanish pretended to participate, to the great amusement of their teammates. This approach proved effective: It conveyed to the Koreans in an appropriately indirect way that their caucuses in Korean were frustrating and annoying to the other side. As a result, both teams cut back on sidebar conversations.

Differing attitudes toward hierarchy and authority. A challenge inherent in multicul- tural teamwork is that by design, teams have a rather flat structure. But team members from some cultures, in which people are treated differently according to their status in an organization, are uncomfortable on flat teams. If they defer to higher-status team members, their behavior will be seen as ap- propriate when most of the team comes from a hierarchical culture; but they may damage their stature and credibility—and even face humiliation—if most of the team comes from an egalitarian culture.

One manager of Mexican heritage, who was working on a credit and underwriting team for a bank, told us, “In Mexican culture, you’re always supposed to be humble. So whether you understand something or not, you’re sup- posed to put it in the form of a question. You have to keep it open-ended, out of respect. I think that actually worked against me, be- cause the Americans thought I really didn’t know what I was talking about. So it made me feel like they thought I was wavering on my answer.”

When, as a result of differing cultural norms, team members believe they’ve been treated disrespectfully, the whole project can blow up. In another Korean-U.S. negotiation, the American members of a due diligence team were having difficulty getting informa- tion from their Korean counterparts, so they complained directly to higher-level Korean management, nearly wrecking the deal. The higher-level managers were offended because hierarchy is strictly adhered to in Korean or- ganizations and culture. It should have been their own lower-level people, not the U.S. team members, who came to them with a problem. And the Korean team members were mortified that their bosses had been involved before they themselves could brief them. The crisis was resolved only when high-

Team members who are

uncomfortable on flat

teams may, by deferring

to higher-status

teammates, damage their

stature and credibility—

and even face

humiliation—if most of

the team is from an

egalitarian culture.

Managing Multicultural Teams

harvard business review • november 2006 page 5

level U.S. managers made a trip to Korea, conveying appropriate respect for their Korean counterparts.

Conflicting norms for decision making.

Cultures differ enormously when it comes to decision making—particularly, how quickly decisions should be made and how much analysis is required beforehand. Not surpris- ingly, U.S. managers like to make decisions very quickly and with relatively little analysis by comparison with managers from other countries.

A Brazilian manager at an American com- pany who was negotiating to buy Korean prod- ucts destined for Latin America told us, “On the first day, we agreed on three points, and on the second day, the U.S.-Spanish side wanted to start with point four. But the Korean side wanted to go back and rediscuss points one through three. My boss almost had an attack.”

What U.S. team members learn from an ex- perience like this is that the American way simply cannot be imposed on other cultures. Managers from other cultures may, for exam- ple, decline to share information until they understand the full scope of a project. But they have learned that they can’t simply ig- nore the desire of their American counter- parts to make decisions quickly. What to do? The best solution seems to be to make minor concessions on process—to learn to adjust to and even respect another approach to deci- sion making. For example, American manag- ers have learned to keep their impatient bosses away from team meetings and give them frequent if brief updates. A comparable lesson for managers from other cultures is to be explicit about what they need—saying, for example, “We have to see the big picture before we talk details.”

Four Strategies

The most successful teams and managers we interviewed used four strategies for dealing with these challenges: adaptation (acknowl- edging cultural gaps openly and working around them), structural intervention (chang- ing the shape of the team), managerial inter- vention (setting norms early or bringing in a higher-level manager), and exit (removing a team member when other options have failed). There is no one right way to deal with a particular kind of multicultural problem; identifying the type of challenge is only the

first step. The more crucial step is assessing the circumstances—or “enabling situational conditions”—under which the team is work- ing. For example, does the project allow any flexibility for change, or do deadlines make that impossible? Are there additional re- sources available that might be tapped? Is the team permanent or temporary? Does the team’s manager have the autonomy to make a decision about changing the team in some way? Once the situational conditions have been analyzed, the team’s leader can identify an appropriate response (see the exhibit “Identifying the Right Strategy”).

Adaptation. Some teams find ways to work with or around the challenges they face, adapting practices or attitudes without mak- ing changes to the group’s membership or assignments. Adaptation works when team members are willing to acknowledge and name their cultural differences and to assume responsibility for figuring out how to live with them. It’s often the best possible approach to a problem, because it typically involves less managerial time than other strategies; and be- cause team members participate in solving the problem themselves, they learn from the pro- cess. When team members have this mind-set, they can be creative about protecting their own substantive differences while acceding to the processes of others.

An American software engineer located in Ireland who was working with an Israeli account management team from his own company told us how shocked he was by the Israelis’ in-your-face style: “There were defi- nitely different ways of approaching issues and discussing them. There is something pretty common to the Israeli culture: They like to ar- gue. I tend to try to collaborate more, and it got very stressful for me until I figured out how to kind of merge the cultures.”

The software engineer adapted. He im- posed some structure on the Israelis that helped him maintain his own style of being thoroughly prepared; that accommodation enabled him to accept the Israeli style. He also noticed that team members weren’t just confronting him; they confronted one another but were able to work together effec- tively nevertheless. He realized that the con- frontation was not personal but cultural.

In another example, an American member of a postmerger consulting team was frus-

Managing Multicultural Teams

harvard business review • november 2006 page 6

trated by the hierarchy of the French com- pany his team was working with. He felt that a meeting with certain French managers who were not directly involved in the merger “wouldn’t deliver any value to me or for pur- poses of the project,” but said that he had come to understand that “it was very impor- tant to really involve all the people there” if the integration was ultimately to work.

A U.S. and UK multicultural team tried to use their differing approaches to decision making to reach a higher-quality decision. This approach, called fusion, is getting serious

attention from political scientists and from government officials dealing with multicul- tural populations that want to protect their cultures rather than integrate or assimilate. If the team had relied exclusively on the Ameri- cans’ “forge ahead” approach, it might not have recognized the pitfalls that lay ahead and might later have had to back up and start over. Meanwhile, the UK members would have been gritting their teeth and saying “We told you things were moving too fast.” If the team had used the “Let’s think about this” UK approach, it might have wasted a lot of time

Identifying the Right Strategy

The most successful teams and managers we interviewed use four strategies for dealing with problems: adaptation (acknowledging cultural gaps openly and working around them), structural intervention (changing the shape of the team), managerial intervention (setting norms early or bringing in a higher-level manager), and exit (removing a team member when other options have failed). Adaptation is the ideal strat- egy because the team works effectively to solve its own problem with minimal input from management—and, most important, learns from the experience. The guide below can help you identify the right strategy once you have identified both the problem and the “enabling situational conditions” that apply to the team.

REPRESENTATIVE PROBLEMS

• Conflict arises from decision- making differences

• Misunderstanding or stone- walling arises from commu- nication differences

• The team is affected by emo- tional tensions relating to flu- ency issues or prejudice

• Team members are inhibited by perceived status differ- ences among teammates

• Violations of hierarchy have resulted in loss of face

• An absence of ground rules is causing conflict

• A team member cannot ad- just to the challenge at hand and has become unable to contribute to the project

ENABLING SITUATIONAL CONDITIONS

• Team members can attribute a challenge to culture rather than personality

• Higher-level managers are not available or the team would be embarrassed to involve them

• The team can be subdivided to mix cultures or expertise

• Tasks can be subdivided

• The problem has produced a high level of emotion

• The team has reached a stalemate

• A higher-level manager is able and willing to intervene

• The team is permanent rather than temporary

• Emotions are beyond the point of intervention

• Too much face has been lost

COMPLICATING FACTORS

• Team members must be exceptionally aware

• Negotiating a common understanding takes time

• If team members aren’t carefully distributed, sub- groups can strengthen preexisting differences

• Subgroup solutions have to fit back together

• The team becomes overly dependent on the manager

• Team members may be sidelined or resistant

• Talent and training costs are lost

STRATEGY

Adaptation

Structural Intervention

Managerial Intervention

Exit

Managing Multicultural Teams

harvard business review • november 2006 page 7

trying to identify every pitfall, including the most unlikely, while the U.S. members chomped at the bit and muttered about anal- ysis paralysis. The strength of this team was that some of its members were willing to forge ahead and some were willing to work through pitfalls. To accommodate them all, the team did both—moving not quite as fast as the U.S. members would have on their own and not quite as thoroughly as the UK members would have.

Structural intervention. A structural inter- vention is a deliberate reorganization or re- assignment designed to reduce interpersonal friction or to remove a source of conflict for one or more groups. This approach can be extremely effective when obvious subgroups demarcate the team (for example, headquar- ters versus national subsidiaries) or if team members are proud, defensive, threatened, or clinging to negative stereotypes of one another.

A member of an investment research team scattered across continental Europe, the UK, and the U.S. described for us how his man- ager resolved conflicts stemming from status differences and language tensions among the team’s three “tribes.” The manager started by having the team meet face-to-face twice a year, not to discuss mundane day-to-day prob- lems (of which there were many) but to iden- tify a set of values that the team would use to direct and evaluate its progress. At the first meeting, he realized that when he started to speak, everyone else “shut down,” waiting to hear what he had to say. So he hired a con- sultant to run future meetings. The con- sultant didn’t represent a hierarchical threat and was therefore able to get lots of participa- tion from team members.

Another structural intervention might be to create smaller working groups of mixed cultures or mixed corporate identities in order to get at information that is not forthcoming from the team as a whole. The manager of the team that was evaluating retail opportu- nities in Japan used this approach. When she realized that the female Japanese consultants would not participate if the group got large, or if their male superior was present, she broke the team up into smaller groups to try to solve problems. She used this technique repeatedly and made a point of changing the subgroups’ membership each time so that

team members got to know and respect everyone else on the team.

The subgrouping technique involves risks, however. It buffers people who are not work- ing well together or not participating in the larger group for one reason or another. Sooner or later the team will have to assem- ble the pieces that the subgroups have come up with, so this approach relies on another structural intervention: Someone must be- come a mediator in order to see that the various pieces fit together.

Managerial intervention. When a manager behaves like an arbitrator or a judge, making a final decision without team involvement, neither the manager nor the team gains much insight into why the team has stale- mated. But it is possible for team members to use managerial intervention effectively to sort out problems.

When an American refinery-safety expert with significant experience throughout East Asia got stymied during a project in China, she called in her company’s higher-level managers in Beijing to talk to the higher- level managers to whom the Chinese refin- ery’s managers reported. Unlike the Western team members who breached etiquette by approaching the superiors of their Korean counterparts, the safety expert made sure to respect hierarchies in both organizations.

“Trying to resolve the issues,” she told us, “the local management at the Chinese refin- ery would end up having conferences with our Beijing office and also with the upper management within the refinery. Eventually they understood that we weren’t trying to in- sult them or their culture or to tell them they were bad in any way. We were trying to help. They eventually understood that there were significant fire and safety issues. But we actu- ally had to go up some levels of management to get those resolved.”

Managerial intervention to set norms early in a team’s life can really help the team start out with effective processes. In one instance reported to us, a multicultural software devel- opment team’s lingua franca was English, but some members, though they spoke grammati- cally correct English, had a very pronounced accent. In setting the ground rules for the team, the manager addressed the challenge directly, telling the members that they had been chosen for their task expertise, not their

Managing Multicultural Teams

harvard business review • november 2006 page 8

fluency in English, and that the team was going to have to work around language prob- lems. As the project moved to the customer- services training stage, the manager advised the team members to acknowledge their accents up front. She said they should tell cus- tomers, “I realize I have an accent. If you don’t understand what I’m saying, just stop me and ask questions.”

Exit. Possibly because many of the teams we studied were project based, we found that leaving the team was an infrequent strategy for managing challenges. In short-term situa- tions, unhappy team members often just waited out the project. When teams were per- manent, producing products or services, the exit of one or more members was a strategy of last resort, but it was used—either voluntarily or after a formal request from management. Exit was likely when emotions were running high and too much face had been lost on both sides to salvage the situation.

An American member of a multicultural consulting team described the conflict be- tween two senior consultants, one a Greek woman and the other a Polish man, over how to approach problems: “The woman from Greece would say, ‘Here’s the way I think we should do it.’ It would be something that she was in control of. The guy from Poland would say, ‘I think we should actually do it this way instead.’ The woman would kind of turn red in the face, upset, and say, ‘I just don’t think that’s the right way of doing it.’ It would definitely switch from just professional differ- ences to personal differences.

“The woman from Greece ended up leaving the firm. That was a direct result of probably all the different issues going on between these people. It really just wasn’t a good fit. I’ve found that oftentimes when you’re in consulting, you have to adapt to the culture, obviously, but you have to adapt just as much to the style of whoever is leading the project.”

• • •

Though multicultural teams face challenges that are not directly attributable to cultural differences, such differences underlay what- ever problem needed to be addressed in many of the teams we studied. Furthermore, while serious in their own right when they have a negative effect on team functioning, cultural challenges may also unmask fundamental managerial problems. Managers who inter-

vene early and set norms; teams and managers who structure social interaction and work to engage everyone on the team; and teams that can see problems as stemming from culture, not personality, approach challenges with good humor and creativity. Managers who have to intervene when the team has reached a stalemate may be able to get the team mov- ing again, but they seldom empower it to help itself the next time a stalemate occurs.

When frustrated team members take some time to think through challenges and possible solutions themselves, it can make a huge dif- ference. Take, for example, this story about a financial-services call center. The members of the call-center team were all fluent Spanish- speakers, but some were North Americans and some were Latin Americans. Team perfor- mance, measured by calls answered per hour, was lagging. One Latin American was taking twice as long with her calls as the rest of the team. She was handling callers’ questions ap- propriately, but she was also engaging in chit- chat. When her teammates confronted her for being a free rider (they resented having to make up for her low call rate), she immedi- ately acknowledged the problem, admitting that she did not know how to end the call politely—chitchat being normal in her cul- ture. They rallied to help her: Using their technology, they would break into any of her calls that went overtime, excusing themselves to the customer, offering to take over the call, and saying that this employee was urgently needed to help out on a different call. The team’s solution worked in the short run, and the employee got better at ending her calls in the long run.

In another case, the Indian manager of a multicultural team coordinating a company- wide IT project found himself frustrated when he and a teammate from Singapore met with two Japanese members of the coordinat- ing team to try to get the Japan section to deliver its part of the project. The Japanese members seemed to be saying yes, but in the Indian manager’s view, their follow-through was insufficient. He considered and rejected the idea of going up the hierarchy to the Japa- nese team members’ boss, and decided in- stead to try to build consensus with the whole Japanese IT team, not just the two members on the coordinating team. He and his Sin- gapore teammate put together an eBusiness

One team manager

addressed the language

challenge directly, telling

the members that they

had been chosen for their

task expertise, not their

fluency in English, and

that the team would have

to work around

problems.

Managing Multicultural Teams

harvard business review • november 2006 page 9

road show, took it to Japan, invited the whole IT team to view it at a lunch meeting, and walked through success stories about other parts of the organization that had aligned with the company’s larger business priorities. It was rather subtle, he told us, but it worked. The Japanese IT team wanted to be spot- lighted in future eBusiness road shows. In the end, the whole team worked well together— and no higher-level manager had to get involved.

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Further Reading

A R T I C L E S

Making Differences Matter: A New Paradigm for Managing Diversity

by David A. Thomas and Robin J. Ely

Harvard Business Review

September 1996 Product no. 96510

You can strengthen your teams’ ability to use the adaptation process suggested by Brett, Behfar, and Kern by fostering a working envi- ronment in which cultural differences are valued. To cultivate such an environment: 1) Encourage open discussion of cultural back- grounds. For instance, a food company’s Chinese chemist draws on her cooking, not her scientific, experience to solve a soup- flavoring problem. 2) Eliminate forms of dominance—by hierarchy, function, race, gender, and so forth—that inhibit team members’ full contribution. 3) Acknowledge and swiftly resolve the inevitable tensions that arise when employees from different back- grounds share ideas and emotions.

Oil and

Wasser

by Byron Reimus

Harvard Business Review

May 2004 Product no. R0405X

In this fictional case study, executives from an English firm and a German company who are seeking a supposed “merger of equals” must resolve cross-cultural tensions threatening the deal. Four experts provide suggestions. For example, develop a new shared vision and common strategic goals for the project (such as “Beat the competition and become number one”) that rise above national differences. Cultivate personal relationships with the “other” to eliminate stereotypes, by getting together in relaxed, shoptalk-free social settings. When you get to know one another as individuals, it becomes easier to let go of negative stereotypes.

Cultural Intelligence

by P. Christopher Earley and Elaine Mosakowski Harvard Business Review October 2004 Product no. R0410J

Team members can further strengthen their adaptation skills by developing their cultural intelligence. 1) Look for clues to the shared understandings that define another culture. For example, do people from that culture tend to be strict or flexible about deadlines? Are they receptive to highly imaginative ideas, or do they prefer more conservative thinking? 2) Adopt the habits and mannerisms of people from other cultures. You’ll discover in an elemental way what it’s like to be them. And you’ll demonstrate respect for their ways. 3) Cultivate confidence that you can overcome multicultural obstacles and setbacks and that you’re capable of understanding people from unfamiliar cultures.