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‘Going Rogue Overseas’ – Top Tips for Multinationals with Overseas Managers

Going Rogue Overseas’ – Tops Tips for Multinationals with Overseas Managers

For any multinational employer, finding and retaining senior talent in their overseas operations is often key to the success of those operations and the group itself.  However, all too often the long-distance relationship with senior managers overseas – like so many other long-distance relationships – can rapidly deteriorate and ultimately break down.  This is often due to poor communication and lack of proper engagement, causing damage and chaos in that overseas business and possibly also the group.

While the reasons for a breakdown in the relationship can be varied, there are certain core themes which we tend to come across time and again based on our experiences of acting on both sides of the table – for the multinational, and also for the “rogue” overseas executive.  Spotting the warning signs, and dealing with them early,  can in many cases help to avoid the disintegration of the working relationship and ensure that the local entity can stay focussed, remain profitable and in growth mode.  It can also help avoid lengthy, time-consuming and expensive potential litigation and harm to the reputation and brand of the multi-national.

Things To Watch Out For

In our experience, manager behaviours which should set alarm bells ringing and prompt an early review, include by way of example the following:

Operating in a Silo

  1. The overseas manager shows signs of operating in a silo and appears to see the local business as their own personal fiefdom and themselves as falling outside of the main group organisation.
  2. The overseas manager appears reluctant to follow parent company instructions and does not welcome your input.
 Territoriality
  1. The overseas manager may become territorial over what they regard as ‘their’ clients and resist business development opportunities aimed at benefiting the group as a whole.
  2. The overseas manager becomes territorial over their own team, resisting centralised management and tries to build the allegiance of the team around them; a sense of ‘us’ versus ‘them’.
Becoming more remote and unavailable
  1. The overseas manager may become gradually more unavailable for example avoiding key strategy off site meetings at the parent company and displaying general disengagement with the parent or group.
Communication breakdown or distortion
  1. The overseas manager may be found to be reporting to head office in an incomplete or one-sided manner.
Personal interests and conflicts
  1. The overseas manager may recruit family members and personal contacts into the business without proper process or authorisation.
  2. The overseas manager may put items through company expenses which blur the line between business expenses and personal items (or worse).
Being resistant or selective with local application of global corporate policies and codes or group strategy
  1. The overseas manager may start pushing back on internal processes or the strategic approach of the parent company on the basis that these do not or should not apply to their overseas operations (for example they begin doing business differently on the premise: ‘it’s not done like that here’).
Preventing or limiting parent oversight
  1. A failure or resistance to have company accounts independently verified by the parent company’s CFO or accountants.
Difficulty retaining good staff 
  1. High staff turnover in those who report to the overseas manager.
  2. Issues such as bullying allegations/grievances or informal complaints being raised against the overseas manager.
What to do next

When issues such as those set out above are raised with local overseas managers they can be met with anger and resistance, particularly if he or she has been left to their own devices for some time in the period leading up to this, and may not see the concerns as being valid.

In our experience, it is not uncommon for overseas managers to seek to raise whistleblowing or discrimination concerns in response to criticism raised against them or when the relationship with the parent breaks down.

These claims attract unlimited financial awards in the employment tribunal.  They can also be difficult and expensive to defend and are an unwelcome distraction from running your business.

When an overseas manager raises these types of concerns there may be the need for a formal investigation followed by a possible grievance process.  If disciplinary proceedings are also ongoing, these various processes have to be carefully managed and co-ordinated to try and minimise the risk of a successful claim against the business.

The further difficulty for any parent company when raising criticism with an overseas manager in a senior role is also the decision of what to do about the day to day running of the business.  Is the manager to carry on with their duties, should they be suspended whilst you carry out an investigation or are they simply to be dismissed and possibly sent on garden leave, with any potential negotiations to follow thereafter?

You will have to consider how the manager is likely to react to any intervention by the parent company and what will happen if they refuse to engage or even actively try to disrupt the business.  The tactical approach to take here will vary depending on the facts of each case and an early assessment of the legal and business risk; local legal advice should be sought when considering the right strategic approach.

Top Tips to Avoid a Rogue Overseas Manager

We set out below our top tips for reducing the risk as far as possible of the senior management of an overseas subsidiary ‘going rogue’, which include (amongst others) the following:

  • Ensure that a member of the parent company sits on the board of the subsidiary  and hold regular board meetings
  • Set clear documented limits around decision making with controls
  • Provide for regular feedback from the overseas manager to the parent company
  • Apply financial limits on local company expenditure before sign off by the parent is required
  • Introduce a requirement of regular visits to the parent entity to update senior group management on business strategy and focus
  • Ensure the parent company CFO reviews and signs off on all annual accounts, pay increases and bonus awards
  • Ensure that recruitment of any family members or personal friends requires special approval by the parent company
  • Monitor individual expenses of the overseas manager
  • Ensure regular manager appraisals by the parent company
  • Consider a short period of secondment to the parent company as far as possible, either at the start of the engagement or at one or more convenient points during the overseas manager’s employment, to allow them to be (re)immersed in the corporate culture, ethos and controls, and to be scrutinised carefully by senior management at close range.
Conclusion

Running a profitable multinational business requires the attention of those leading the business and its strategic direction to remain focussed on profits and growth.  Dealing with concerns over local senior management is invariably a drain on time and resources and can be disruptive to the business and client relationships.

Keeping an eye to the warning signals set out above and introducing some of the suggested remedial management actions will go some way towards either avoiding future problems with overseas managers or at the very least spotting them early.  This then allows you to deal with these before they impact on growth and profitability (with proper succession planning if necessary) and with hopefully minimum disruption to the overseas and group businesses.

Bettina Bender is a Partner at CM Murray LLP and Chair of Innangard International Employment Alliance.

For more information contact Bettina Bender.

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