Laura Duksaitė | Expansion abroad: choosing a local or a Lithuanian manager?
Our country's investment abroad has increased by a factor of one and a quarter in a decade. Increasingly, Lithuanian companies tend to hire local market managers in their export markets. What is driving this trend?
As Lithuanian companies expand abroad, they are increasingly looking to hire local managers from that market. Our country’s investments abroad have increased by a factor of one and a quarter in a decade. Number of companies and employees Number of companies – roughly doubled. So the demand for managers in our companies abroad is growing accordingly.
What I notice from the managerial selections is that in the past about 9 out of 10 cases the foreign market – Ukraine, Poland, Germany, Sweden or elsewhere, a company expanding into a foreign market “imported” its managers from Lithuania, now in about 4 out of 10 cases the company tends to hire local managers from that local foreign market.
Whether expanding into Finland, Poland, Germany or elsewhere, they are increasingly choosing a local market candidate. This is a growing trend.
I would identify three reasons that reinforce this trend.
- For one thing, wage differentials are no longer as drastic as they used to be some ten years ago.
- Second, there has been significant progress with English. It has long been a common business language, and it’s not a problem for managers or teams to hold meetings in English.
- Third – local people have more social capital there. He tends to have a better understanding of the local market and cultural nuances, helping to achieve results faster.
After all, in your own country, borders help. Being local in that market – Ukraine, Finland, Germany, UK or anywhere else, you naturally have more contacts network. It’s easier for a manager like that to open doors, because networking is critical for any manager. We have to realise that we are still looked at with suspicion in many places abroad, that we are not known. And it’s very different when the contact comes from a local manager who speaks the local language, knows the cultural nuances and knows many local people personally.
The same is true in our market. Here, it’s easier for local managers to deliver results. There is a big difference, for example in Lithuania, whether you get a call from a Lithuanian sales manager or, say, a Kazakh one, even though they are both experts in their field.
Study on European business units showed that units headed by local managers often have better performance, including higher sales growth, productivity and innovation, compared to those headed by managers from the headquarters country.
We have also talked about recruiting local managers in foreign markets in our webinar with AGILIUM international executive search network, and we are planning other webinars in the future, so if you are interested in working in foreign markets, please write us with your ideas on what markets you would like to see covered in future webinars.
