In the past couple of months, my people watched one of our major electronics company repeatedly postpone submitting their quarterly financial statements, which ended last week in their filing a report with their auditors issuing a disclaimer of opinion (i.e., auditors had doubts about the reports), and an announcement that their outlook on the net loss for the fiscal year ending this March would be in the order of ten billion USD.
Well, we now have a couple more giants in their respective industries that have announced either postponement of releasing the annual report or an outlook of a substantial net loss for the year. And what do they all have in common? Their failure to properly oversee their subsidiaries overseas.
I do not think that my people are the only ones having difficulties governing entities across borders and oceans. We speak different languages and practice differing business customs, and it is not easy to establish a uniform corporate governance system that can accommodate all these differences. But my people seem to have a particularly hard time getting their subsidiaries overseas to keep in step with the rules and policies the parent companies have set in producing the maximum revenue while complying with local and global laws and regulations.
Maybe it is because we are not good at communicating (in English, some would claim) corporate values and goals?
Maybe it is because we are not good at setting easily understandable corporate rules and policies?
Maybe it is because we are not good at establishing corporate governance systems that see diversity as a strength, not a weakness.
When I worked as a member of the most hated group of people in a company, I took on a project in which I found the need to interview all employees of a business section above a certain rank. I picked the subjects off the organization chart and submitted the list to the person in charge of this section, and he asked “you’re really going to interview them, too?” as he pointed at the names of heads of overseas operations.
“Yes, I can (communication competency-wise as well as in terms of authority), and I will,” I replied. He warned me I would get nothing out of them – which made me wonder why… does he tell them to keep their mouths shut, or tell them nothing of importance to tell me? – but I set up conference calls with them anyway. He was right, I got nothing out of them with regards to what I was investigating.
But he was wrong, I got more than I could ever wish for from them… I won over their trust that there is someone at the headquarters who listened to them, and regained their confidence that their opinions mattered. At first, they only called me up, but as I forwarded (with their permission) their concerns and suggestions to their designated counterparts in the headquarters, they soon began to communicate without me as the messenger.
Maybe at the base of all good businesses is trust and confidence – with customers and shareholders, of course, but surely within the organization as well.
And maybe they are not as difficult as governing entities across borders and oceans… maybe they are just a phone call away.
How hard could it be to pick up the phone and say “how’ya doin’?”
If you asked me “you really think it’ll work?” I will reply “yes, it can, and it will!”
(I should tell you that, while I was with this company, the abovementioned business section unfortunately was not able to turn things around… but they did not cause any serious troubles leading to loss of trust and confidence in customers and shareholders, either!)