ECONOMICS AND TRADE | Achieving growth through open markets
28 February 2008
More U.S. Companies Led by Foreign-Born Executives
Foreign-born, high-potential people land executive jobs, board seats
Washington -- A girl from a conservative Brahmin family in India, who plays in an all-female rock band, might not seem like material for a future leader of a large U.S. company. Yet, with such a background, business education at Indian and U.S. universities, and long managerial experience, Indra Nooyi is now chairwoman and chief executive of PepsiCo., a food and drink company considered a symbol of American commercial prowess.
Although Nooyi’s career can hardly be called typical, a growing number of foreign-born executives and senior managers hold top positions at U.S. multinational companies or their foreign subsidiaries.
Of the 100 largest U.S. companies, 14 are now run by foreign-born chiefs compared to nine a decade ago, according to Standard & Poor's, the world's leading provider of independent financial data. But even if a large company has U.S. natives as top leaders, it is likely to have some executives with foreign passports, said Fred Foulkes, professor of organizational behavior at Boston University.
In contrast to the past, when most foreign-born U.S. business chiefs came from other industrialized nations, today some hail from developing countries – Egypt, Morocco and, particularly, India. Most came to the United States to attend advanced degree programs and worked their way up the corporate ladder at U.S. companies.
In the U.S. corporate world today, “the cream rises to the top no matter what,” Foulkes told America.gov.
U.S. and European multinationals look for talent beyond their home office though. As firms expand globally and derive an ever growing part of their revenue from foreign sales, they look for top managerial talent in host countries.
“There is a tremendous [managerial] talent shortage, so very good people have lots of opportunities,” Foulkes said.
In the past, careers of non-American executives and managers were limited to U.S. companies’ subsidiaries in their home countries. But with time, corporate boards started realizing that global companies require global executives and that such people do not always hold U.S. passports, experts say.
Charles Ingersoll of Korn/Ferry International, a leading executive recruiting firm, says there is a growing pool of international executives who pursue almost entire careers outside their native countries. For example, Sidney Taurel, born a Spanish citizen in Casablanca, Morocco, studied in France and the United States, and ran business operations in Brazil and Europe before becoming chief of Eli Lilly and Company, a pharmaceutical firm.
Cosmopolitan executives can be assets to companies that hire them, Ingersoll told America.gov. They are more comfortable than some of their American counterparts working with ethnically and nationally diverse workforces and being relocated among different countries.
Even companies that do not have non-Americans in their top echelons often require newly hired U.S. managers do their first stint in another country to gain international experience. Such experience is viewed in the corporate world as a credential, quite a change from just two decades ago, when it might raise suspicion or doubt, Ingersoll said.
However, Foulkes said, most major companies have cut back on the number of American executives sent to overseas posts because such assignments are expensive. With two-career couples as the prevailing family model in the United States, such assignments are increasingly difficult for American executives who might have a hard time finding a decent job for a spouse in another country, he said.
The most globally-conscious corporations, such as General Electric and Procter & Gamble, hire high-potential foreign-born managers at an early age and groom them for executive positions in the future. They also hire non-American U.S. business school graduates, who make up between one third and 40 percent of those graduating from business administration programs.
But the ground is shifting in more than one way in the corporate world as multinationals increasingly see themselves as global rather than U.S. or European companies, according to Foulkes.
Multinational companies are not only adding non-Americans to their boards of directors; they are starting to move their headquarters to hubs of international business, places where they hope to have the most global leverage. General Electric has moved the headquarters of its two major units to London. Halliburton, an oil services giant, relocated its home office from Texas to Dubai, United Arab Emirates. And IBM has put the head office of a large department in China.
