Paddy Ridley, an Australian management consultant, was visiting with an old client in Los Angeles. As he stood up to show his guest out, Paul Escala flipped a business card across the teak desk. “Here’s an old friend who could use some help. He thinks he should talk to someone about joint venture management. I told him he can learn from you.”
Paddy frowned in puzzlement. His expertise lay in analyzing organisational cultures and proposing solutions when the culture was dysfunctional. He advised companies on the dangers of a culture not directed to achieving management goals. The problems were most severe when the workforce were united in defiance of management decisions that they considered arbitrary and contrary to their interests.
“But I’m not the guy to consult on joint ventures. Paul, you know my field of work. But I can recommend your friend some names.” And he mentioned a number of colleagues who worked in the field of joint venture management and billed in the same fee bracket. “I told him he can learn from you,” Paul repeated emphatically, and refused to be drawn further. “Quin is expecting your call.”
Two days later Paddy met with Quin Marrow, a fellow Australian and CEO of a medium-sized mining company.
“We’re new to joint venturing and we need all the help we can get,” said Marrow. “We’re into a venture now, and frankly, we’re having problems.”
Quin’s company mined rare minerals. He had signed a deal with a Peruvian company to mount a six-month exploration and was committed to supplying the project manager. The man posted, Ed Allison, a long-term employee, had been a disaster, and that costs the company money.
“What selection procedures do you use?” Paddy asked Quin.
“The best – or so we thought.” He named a well-reputed local firm of consultants. “Enderek trained my human resource people in selection interview techniques. They sold us their psychometric test. The cross-cultural aptitude test. And they were expensive.”
“They give value for money,” corrected Paddy. “That’s the best selection procedure you can buy.”
“How did the employee find out about the post?”
“Ed? We asked for volunteers. We used the internal electronic mail system and hard-copy notices. Everyone was circulated, but he was the only one to step forward.”
“How many were eligible?”
“We’ve got twenty or thirty guys who we consider qualified for a job like this. They all have project experience and they’re engineers. But the other’s weren’t interested, only Ed.”
Quin shrugged. “Who knows? Each individual has a private life that I know nothing about. And don’t want to know.”
“And none of them showed any interest? How much were you offering?”
Quin detailed the package. So far as he could judge from his limited experience of joint venture deals, Paddy thought it generous.
“They talked it out among themselves and decided not to apply. They say the money isn’t good enough. But Ed’s never been one of the group.”
“And you had to appoint an insider? You couldn’t appoint from the external market?”
“No, it had to be internal. Failing to make an internal appointment would have lost us face. And placed us in breach of contract. We had to go ahead with it. But we won’t be caught like that again. That’s why we came to you.”
“How was Ed qualified?”
“He took the tests. His score for cross-cultural aptitude was terrible. Enderek said it was the lowest they had ever recorded. They couldn’t believe it, they asked to retest. But I was not surprised.”
“Even here, Ed is not a good communicator. But he has strengths. He’s a brilliant engineer. He has management experience. And he’s loyal. We have a fairly rapid turnover, higher than the industry average, but Ed is a long-timer, he stays with the company. So we took the gamble.”
“How long did he last?”
“Four weeks. By the end the Peruvians were phoning every day. The final straw was a technology problem. The Peruvians wanted to see the plans of one of our drilling bits and Ed said no. A flat no, and all the four-letter words. He should have checked with me first. I had no objections, it wasn’t our newest technology and I had already promised their CEO. My Research & Development people agreed with me. And Ed knew that. But by then he’d decided that he didn’t like our partners and wasn’t about to do them any favours.”
“They demanded his recall. I had no option. Finally I told to my senior engineer to take the job, at double the money I was paying Ed. The Peruvians have met him and asked for him, he’s a first-class engineer. But what they don’t know is he doesn’t know anything about joint-venture management. They’re going to be disappointed. Then we’ll be in a worse situation than ever.”
“Is that how you perceive the problem?”
“Yes, whether we like it or not we have to do more joint venture work. We need joint venturing skills. First, we have no experience of working abroad. We don’t have the expatriate workforce.”
“An international company does not need to depend on a vast number of expatriate managers. You can build a multinational culture and have very few expatriates,” said Paddy. But Quin waved him aside.
“That means we need a new selection procedure. However good the Enderek process, it isn’t right for us. Second, we need advice on designing a remuneration package for expatriates. A package that brings my staff on line but doesn’t bankrupt me. Third, we need training in joint venture management. Fourth…”
Quin broke off and smiled ruefully. “You should have stopped me. I know that the one thing consultants hate is being told what advice to give. Paul said that you were the guy to help. How do you see the problem? How can my staff learn about joint ventures?”
Paddy was about to protest that he did not normally consult on joint venture issues, when he suddenly understood why Paul had recommend him.
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