Instead of giving me a medal, they fire me
September 22, 2006
Instead of giving me a medal, they fire me. Check it out:(Israel Business Arena Via Thomson Dialog NewsEdge) Procedures are the US multinational's tablets of the law. They are essential to its existence. But Israeli managers who have worked at the branches of such multinationals sometimes feel that such procedures have taken over its nerve center. For their part, Israelis are, generally speaking, not inclined to view procedures as sacrosanct. It should come as no surprise, therefore, that they view excessive procedures as bureaucratic, non-productive, and insensitive. You might not be fired for failing to meet business targets, say some managers, but you will get fired for not filling in a form.
Working at the local branch of a global corporation, especially a US one, reveals differences in mentality, often vast, which sometimes merely cause discomfort, but which sometimes can result in all-out conflict, and in firings by email.
Two events of this kind made headlines recently. Yair Yahav, cardiology unit manager at the Israel branch of Boston Scientific Corp. (NYSE: BSX), was suspected of excessively aggressive marketing in violation of the company's ethical code. He was disconnected from the company's computer network. When he tried to find out what the fault was, they avoided him, and when he came in to the office, he was summarily dismissed by conference call. Yahav has filed suit against the company in the Labor Court, mainly to save his good name.
This policy of instant dismissal, by email or telephone, sometimes with a security guard accompanying you to your desk and taking your employee card, keys, and other items, is common practice in US corporations. In Israel it is viewed as cruel, since it creates the impression that the person who has been singled out for dismissal did something terrible.
Four members of the communications support team at the Israel branch of Hewlett Packard (NYSE: HPQ) were fired in the following manner: They were summoned to a conference call together with other employees, and the manager from company headquarters overseas read out a list of names of people who would continue to be employed. Their names were not on the list.
The CEO and employees were fired by email
A few months ago, HP Israel was embroiled in a scandal over the grey marketing affair, the parallel marketing of HP products from Israel to other countries, in contravention of company procedures. HP Israel managing director Gil Rosenfeld received his dismissal notice by email (Dear Gil, began the letter from HP's divisional manager in Europe), along with 13 other employees, three of whom sued the company.
Following an intense battle, during the course of which Rosenfeld and HP agreed to take their dispute to an adjudicator, HP headquarters issued a statement in which it said it had been convinced that Rosenfeld was not responsible for the parallel export activity and that due to a breakdown in mutual trust, Rosenfeld had asked to step down from his post.
Eight other employees never made it to court. After their lawyers informed the company that their clients' hearings had not been conducted properly, a process of hearings and arbitration was started, and most of the cases ended in out-of-court settlements, without any lawsuits being filed. Adv. Ditza Rapahely, who specializes in labor law, says that multinational corporations that set up branches in Israel manage their local offices as if they were US branches subject to US law, which allows an employer to summon an employee, tell him to pack his bags, and wish him goodbye and all the best.
These companies are unaware of Israeli law and the rules that about a proper hearing, says Raphaely. The law in Israel states that an employee has a right to a hearing at which he will be given the opportunity to state his grievances before dismissal, and the employer must prove that he held the hearing process seriously and in good faith.
Branded an offender, instead of getting a medal
What is happening here? Why do managers who have had a good career locally and have never been suspected of anything, find themselves being sacked in such an abrupt manner? Why do others feel suffocated or intimidated, instead of feeling happy to be part of a global corporation that provides many opportunities for promotion and contacts?
This is simply a matter of cultural differences. The average Israeli manager feels pressured by the US corporate mindset. While it's true that it is an offence to fill in a form retroactively, Israelis don't expect an employer to fire someone who generated millions of shekels in revenue because of this, says Raphaely. You find yourself committing an offence whereas in an Israeli company you would get a medal.
The case of Yair Yahav and Boston Scientific is sub-judice and therefore it cannot be explored in detail. However, the two sides are in dispute over whether Yahav violated company procedures on proper reporting and authorization for actions. At worst, he is accused of activity that was not in accordance with company procedures.
For US corporations, two things represent a red light, the danger zone, explains Adv. Amos Bentzur. These are safety procedures and mechanisms for fraud prevention. For them the risk is far greater than, say, the retroactive filing of an invoice for a few hundred shekels because someone forgot to fill in a form. They see this as a breach that endangers the organization. The Israeli employee says what happened, what did I do? To him the response seems disproportionate to the action. The person who fires you is someone from the legal department who doesn't know you at all, and doesn't care who you are or how much your superiors appreciate you.
Sources close to Yahav claim that the one of things that astounded him was this cold atmosphere, that the guy from the legal department, who told him he was being fired, didn't ask his regional bosses what sort of person or employee he was. They, for their part, didn't come to his defense. People familiar with this type of corporation do not find this surprising. No one messes with the legal department in these places.
The role of legal counsel carries considerable weight in the corporation, far more than is the norm in both Israeli and European companies. Managers view his recommendation as an order, even if it is not categorical.
The corporate counsel, unlike his colleagues in law firms, does not benefit from the organization's dealflow and is not assessed according to the organization's business results, but solely by his success in keeping the organization out of trouble, says Doron Debbie, former manager of Boston Scientific Israel and now owner of Sigma Health Care. Therefore he will always play safe and be conservative in his recommendations. Whenever he is in doubt, the answer is no. This might be a generalization but it is a fair description of the overall atmosphere.
In cases of breaches of ethics, Debi adds, Any employee can phone, in confidence, a help line run by the legal department, and report a person in the organization who he or she thinks is guilty of misconduct. On the one hand, this service has given employees substantial power. However, people do not always use the tool in the way that it was intended, and it can also be an opening for the settling of scores.
Centralization has weakened managers
Yahav, who previously worked at Johnson & Johnson Israel, joined Boston Scientific Israel a year ago, after an exclusivity agreement to which it was committed lapsed and it could begin marketing its cardiological stents in Israel. Johnson & Johnson is also a US corporation, but it is an established company with many subsidiaries and a more decentralized style of management. Boston Scientific is a company with a centralizing management style like that of HP, where the global management controls every move and document from a distance.
Dr. Ehud (Udi) Graf, Gil Rosenfeld's predecessor at HP Israel, described, in his farewell interview, how companies of this kind have become more and more centralized, reducing local managers to the status of operational administrators, with no authority to make decisions on anything, whether it's price offers or human resource management, and how the enterprise builds in conflicts between departments, as a way of preserving its power.
People like Yahav suddenly find themselves having to obtain approval for everything, such as sending an employee abroad, providing customers with samples from inventory before they place their order, and certainly, the building of a complex proposal to, say, a hospital which is buying a large medical device and medical equipment inventory in one deal. This is how the organization exerts control over its geographically dispersed empire and prevents fraud. On the other hand, a local manager unused to this finds that the various forms - every form is forwarded by the CEO to vice president who then forwards it to the regional president - makes every action cumbersome.
In addition, this organizational culture has an aspect that simply drives Israelis insane. The corporation sends out daily emails, often more than once a day, to the entire staff. Employees are directed to enter the site, read the procedure and confirm that you have read it by signing the page. Sometimes the staff have to take an online test to show that they have understood the procedure. A manager who worked at such a company said the directives contained all sorts of meaningless slogans and phrases such as the significance of qualitative responsibility. They were covering their behinds.
Global companies love to use the phrase think global, act local, says Debbie, but they don't always know how to put this into practice. Sometimes they think that the way they do business in the US is the right way to do it everywhere and this is not always correct. Debi, who was manager at Boston Scientific Israel four years ago, and has been working with global corporations for more than 16 years, believes that US global corporations have become increasingly centralized in recent years. This trend has accelerated further in the aftermath of the Enron affair, as the result of which US companies, mainly the publicly-traded ones, found themselves drowning in a sea of reports and statements down the entire organizational hierarchy.
A lot of things that a local manager could previously approve alone, now need approval from above. In this way, a country general manager is turned into a sales manager rather than a CEO with authority. This creates conflicts for certain managers. A manager who is considered by the market as dominant, independent, and an initiator of change, feels such procedures have robbed him of his authority, and are even insulting. It's as if he cannot be relied on, and he may feel that he cannot demonstrate his capability.
Debbie says that the conflicts between local and global managements are not unique to Israel, and some of the European managers who report to global managements also find themselves embroiled in them. However, this culture makes a significant contribution to the growth of these companies into global corporations.
Debbie describes a situation in which 20-30% of a local manager's time is spent making reports, presentations, and filing formal documents with regional management weekly, monthly, and quarterly; Israeli managers often feel that the excess bureaucracy harms business activity, he says.
Israeli managements in multinational corporations usually report to regional managements. A regional management, says Debbie, is a staff function, often lacking operational experience on the ground. In many instances, the management team there functions as a coordinator between countries and global management. Many people take on this position as a stopover point in their career, and serve for three or four years in the role before moving on to their next position in another geographical region. Such a manager prefers not to make waves, and he or she will maintain industrial quiet and meet targets well. These will not be low, but they also won't be too high, so that they don't set him or her targets that are too aggressive in the following year."
We can do it better
Actually, and once more speaking generally, a regional manager tends to be conservative and focus on surviving. He or she is likely to turn down any suggestion for a revolutionary business move that could bring substantial success, to avoid exposure to risks. An ambitious Israeli manager is likely to find work with such a regional management frustrating, says Debi.
Adv. Bentzur thinks that Israelis, by nature, Don't always take what is said seriously. Someone issues a directive? We'll get round it' This is the approach that enabled us to survive 2000 years in exile. You accept the regime, but you know how to live under it. But when companies with a US corporate management culture hand down a directive, they expect it to be carried out. The Israeli notion that we can do it better sometimes creates tension.
In most cases, the problems stem from the fact that we misinterpret the gentility, or the cultured behavior of the other side, the manager in charge. We find that in 90% of cases, a directive was issued and someone thought he could cut corners or shorten the process. They may let such instances go as long there is success, but they don't forget. And since a person working in a US corporation is classed as vulnerable,' he or she is like a foreign citizen in a foreign land,' even if he or she works in Israel, and is the first to be affected when the organization hits a rough period. He or she is the weakest link and no American manager will sacrifice himself for an Israeli manager.
According to Bentzur, cutting corners is also commonplace among Israeli managements in other countries. We managed an operation for an Israeli company in India. It bid in an international tender, which stated explicitly that bidders would have to wait for certain regulations. I drew my customers' attention to this and they said, We'll manage, we've got connections.' Israelis think that Never mind what's written there, we'll fix things on the move.' And then the regulator exercised his authority, the activity was put on hold, and the customers yelled They've cheated us, they've set us up.' But that wasn't true. Everything that happened was predictable.
Published by Globes [online], Israel business news - www.globes.co.il - on September 20, 2006
Copyright of Globes Publisher Itonut (1983) Ltd. 2006
Copyright 2006 Globes. Source : Financial Times Information Limited.
Related Tags: boston scientific, legal department, regional management, local manager, global corporations, manager
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