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- iHaveNet.com: Economy
by Thomas K. Grose
Carlos Ghosn should be the very model of the modern major corporate leader in a globalized world bestraddled by multinational companies. He was born in Brazil to Lebanese parents, educated in France, and speaks four languages fluently. He is chief executive officer of both French automaker
"There is a huge variety of styles, partly produced by historical, cultural, and regulatory differences," says Simon Collinson, professor of international business and innovation at Britain's
If you think of global business styles as a continuum, U.S. executives are at one end, their Asian counterparts at the other. American executives, and the companies they lead, are generally more comfortable with risk and uncertainty than those in Europe and, particularly, Asia. That's partly an outgrowth of the individualism and entrepreneurialism so ingrained in U.S. society. Style and culture clashes are a big reason why cross-border mergers often end in tears, like the ill-starred hookup between Germany's Daimler and Detroit's
It's also why there is no global market for CEOs, says Craig Crossland, an assistant professor of management at the
Actually, there are a number of styles within the United States, but here's what is common to all American CEOs, according to Crossland: "They have more discretion to stamp their idiosyncratic style on a firm, for good or bad. They have more latitude to make large, strategic decisions themselves" on matters ranging from hiring, firing, and restructuring to expanding markets and stopping or starting product lines. Adds Jaideep Prabhu, an expert on Indian business at the
In Asia, you would be hard-pressed to pin a decision--bad or good--on any one CEO. Decision making is consensus-driven and collaborative. Decisions are made only after much consultation and only after everyone has signed on. Even though Stringer has imposed some Western-style management practices on
The American system is also meritocratic and performance based. Pay, bonuses, and promotions are tied to doing a task well. That's not always the case at large companies in Asia. That's because they are often family run and reliant upon complex family and social relationships. "That's why mergers and acquisitions are less common there," Collinson says. It can also result in less-than-deserving people being rewarded. At some Indian companies, Prabhu says, "people were promoted just by being around for a long time." America's meritocracy is, however, a double-edged sword for U.S. execs. Sure, they can earn jaw-dropping pay packages if they succeed, but they'll probably get the boot if they fail. An American CEO is twice as likely to get bounced because of bottom-line losses as a CEO in Japan, according to Crossland.
American executives' operating methods also are shaped by the capital markets, which are obsessed with short-term gains. "One trademark of the American style is a focus on achieving results, short-term and long-term," says Neal Hartman, a managerial communications expert at
Mills says American CEOs excel at three things, starting with controlling costs. "In Europe," he says, "they're nowhere near as good at it"--in part because culture and politics make it harder to lay off workers. Americans also are good at combining and recombining assets to give the impression of creating value. "They're constantly buying and selling divisions, which is why private equity exists" and why top executives are so in the thrall of Wall Street. "This is really the American style of management. You build by acquisition; organic growth is much less common." Finally, Mills says, "they're very good at paying themselves. European and Asian executives spend more time building their business and less time paying themselves." And since U.S. executive compensation often is paid in stock options, well, that also explains why CEOs are sensitive to the capital markets' demand for results.
American phenomenon. Also striding the U.S. corporate landscape are celebrity CEOs, as well known to readers of
How likely is it that the world's varying executive styles will converge? "It's too early to tell," says
That's not to say, however, that any one method reigns supreme. Arguably, the high-risk, more flexible styles of American CEOs are more suited to "disruptive" industries, like fashion, high technology, and entertainment, while the careful, consensus-driven styles of Asian execs are more at home in mature, slow-growth industries. But other than that, Hambrick says, "there's no best way to run a company. It's all a matter of it being a cultural fit." In other words, when it comes to corporate leadership: Vive la différence!
© U.S. News & World Report
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Economy: In a Global Economy, American CEOs Are a Different Breed