Colgate-Palmolive, the $6 billion a year personal products giant, earns nearly two-thirds of its revenues outside the United States. For years Colgate succeeded, as many US multinationals have, by developing products at home and then “throwing them over the wall” to foreign subsidiaries. Each major foreign subsidiary was responsible for local manufacturing and marketing. Senior management positions in these subsidiaries were typically held by Americans, and practically all the company’s US-based managers were US citizens. In the early 1980s, Colgate realized that if it was going to succeed in the rapidly changing international business environment, it would have to develop a more transnational orientation. Its competitors, such as Procter & Gamble, Unilever, and Kao, were trying to become transnational companies, and Colgate needed to follow suit. Becoming a transnational requires developing an international cadre of executive managers who are as at home working in one culture as in another and who have the ability to rise above their ethnocentric perspectives. As a first step toward building such a team, Colgate began recruiting college graduates in 1987 and putting them through an intensive international training program. The typical recruit holds an MBA from a US university, speaks at least one foreign language, has lived outside the United States, and has strong computer skills and business experience. Over one-quarter of the participants are foreign nationals. The trainees spend 24 months in a US program. During three-month stints, they learn global business development secrets of, for example, Colgate toothpaste, compiling a guide for introducing a new product or revamping an existing one in various national markets. Participants also receive additional language instruction and take international business trips. When they have completed the program, the participants become associate product managers in the United States or abroad. Unlike most US companies, Colgate does not send foreign-born trainees to their native countries for their initial jobs. Instead, it is more likely that a French national will remain in the United States, a US national will be sent to Germany, and a British national will go to Spain. The foreigners receive the same generous expatriate compensation packages the Americans do, even if they are assigned to their home country. This extra pay can create resentment among locally hired managers of foreign subsidiaries. Colgate is trying to resolve this problem by urging its foreign subsidiaries to send their brightest young managers to the training program. In addition to the management training program, Colgate has taken a number of other steps to develop its international cadre of managers. In Europe, for example, the company is developing “Euromanagers,” managers who have experience working in several European countries. This is a departure from the established practice of having managers spend most (if not all) of their working careers in their home country. Also, Colgate now tries to ensure that project teams contain managers from several different countries.
What is the relationship between HRM and strategy at Colgate-Palmolive?
How might Colgate-Palmolive’s international training program improve its economic performance?
What potential problems and pitfalls do you see with Colgate-Palmolive’s international training program?