VideoBut since the world is a big place, how does one get enough experience to prepare for all the different cultures that might be valuable to know about upon becoming CFO? According to Rice, it's more a matter of becoming familiar with the types of concepts that might be different in other countries and cultures than absorbing specific details. "If you've never worked outside your own country, you might never know to ask a question," he said. "But given that you've had an experience in even one other country, you're smart enough now to ask it."
Not asking a question at the right time obviously can have disastrous consequences. When Frank Brown, now the dean of INSEAD, the international graduate business school, was working on mergers and acquisitions while employed by PricewaterhouseCoopers, he "saw a bunch of deals crater because Americans didn't understand the Japanese and vice versa. One didn't happen because the Japanese didn't bid below the asking price, thinking it would be an insult to the Americans."
If you've worked anywhere in Asia, and you're flying for the first time into, say, Singapore to do business, you can say, "You know, I've learned that there are some interesting things about Asian cultures, so I better have someone on the ground who can answer my questions," said Brown, who wrote a book called The Global Business Leader. "And it so happens that in Singapore, it's an insult to put your right hand on anybody."
Of course, it's not just cultural norms that must be understood. The main reason global know-how is valuable is that every country also has its own legal, tax, and compliance issues, which a CFO must be prepared to deal with. International experience, Brown said, informs "negotiations of any kind, hiring of any kind, financing acquisitions, divestitures, partnerships, joint ventures, licensing deals — any kind of transaction you can think of where you're going to be working with someone from another culture."
To that list, Blythe McGarvie added that going abroad teaches finance executives what it feels like to be out of their comfort zones, how to see cultural nuances instead of only black and white, and how to identify possibilities they might not otherwise have known existed. She said that, for instance, "A CFO has got to understand where to go for sovereign wealth funds and where to look in the world to enhance shareholder value."
Globetrotting
Brown said that among the many multinational companies he worked with while at PwC, the most adept at moving people around the globe was Schlumberger, the big oil-field services company with headquarters in both Houston and Paris. There, executives in early and mid-career stay in one location no longer than three years before rotating to the next assignment (the company has operations in about 85 countries).
In an interview with CFO.com, Schlumberger CFO Simon Ayat said it would be impossible for someone to head finance at the company without extensive global experience. A person who knows nothing about the differences between jurisdictions' varying legal, tax, and compliance requirements "doesn't understand the structure or the amount of resources that must be put in place," he said. "There is no cookie cutter." Ayat, by the way, has moved 12 times in his 26 years with the company.
Within the finance function, Ayat said, Schlumberger recruits in the areas where it has operations, but when a high-potential person is hired, he or she is sent to another country either immediately or after one year.
"We do this, first, because we like to spread knowledge from one place to another," he said. "Second, we want to teach them best practices. But we also want to turn them into a 'Schlumberger person' — so that they become Schlumberger more than anything else, sometimes even their own cultures. When you send these people abroad and they live the international life of Schlumberger, they come back different people. They know the Schlumberger culture and requirements and become better employees." Most executives eventually return to their home countries after several assignments, he noted.
For companies content to give finance executives only one or two international experiences, the consensus among those interviewed for this article was that it doesn't make all that much difference where they go. China and India are obviously burgeoning commercial markets, but the rest of Asia and Europe are still extremely important, and now more companies are launching operations in South America and Africa. "The pace of globalization is extraordinary," said Brown.
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