Would you invest in a project that had a 50 to 70 percent chance of failure? That is what most international companies do when they start and operate international joint ventures. While there are many potential advantages to international joint ventures, most are based on hope more than logic. These inherently unstable relationships are expanding more than at any time since the recession of 2008.
A recently completed comparative benchmark study of international joint ventures found the following causes of failure:
• poor selection of a partner
• partner has different strategic goals—short-, intermediate or long-term
• lack of effective integration between partners
• change in strategic objectives
• unequal commitment or contribution by partners
• lack of trust
• unclear or misperceived goals and expectations
• poor selection of personnel
• managers from parent companies cannot get along
• best people not assigned to the joint venture
• government entities as partners
• divergent national interests
• government changes the rules
• bad faith
• cannot decide whose rules to follow
• degree of autonomy
• failure to adapt business practices to the local culture.
With all these potential hazards, one might expect training and development offices to be swamped with work on solving these problems. But interviews with the directors of international training and development departments show they are rarely asked to be strategic partners in these joint ventures. In the rare cases where training has taken a proactive role, these initiatives have contributed significantly to the success of the venture.
What training and development strategies can organizations implement to improve an international joint venture’s chance of success? Here are some recommendations:
• Train those involved in the selection of partners.
• Conduct corporate culture inventories between joint venture partners.
• Look for obstacles and enablers—benchmarks and expectations.
• Conduct a cultural due diligence and analysis of each partner.
• Conduct an HR due diligence and analysis—“will they stay after the party?”
• Provide cultural training for all parties and partners early in the process.
• Support open internal communication processes about the venture—rationale, people, processes, and the like. Do this early and often.
• Provide team-building for integration strategies. Help to create a unique corporate culture imbedded in processes, procedures, and business goals. Include timelines and milestones.
• Help examine if home culture policies and procedures contribute to productivity.
• Establish locally sensitive policies and practices.
• Develop a global HR planning and development program with clear links between expatriate assignments and career planning.
• Outsourcing for best international services.
• Create global rotational programs to integrate local country national managers into the broader corporate culture.
• Keep on learning. If the joint venture fails, conduct a post-mortem to find out why and learn from past mistakes.
• Share information across the business, especially with overseas personnel.
• Share issues and solutions with your colleagues.
If just a few of these recommendations are followed, organizations can significantly improve the chances that international joint ventures will succeed.
Do you have thoughts on how training initiatives can help improve international joint ventures, mergers, and acquisitions? Share them in the Comment section below.
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