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S w 907C41 DEVELOPMENT OF A MULTINATIONAL PERSONNEL SELECTION SYSTEM Professors Diana E. Krause and Reiner Piske wrote this case solely to provide...

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Case: Development of a Multinational Personnel Selection System

Submit your group response responding to the questions presented below.

Assignment Questions:

1.(a) What strengths and shortcomings do you see in the newly developed personnel selection system? (b) What are the causes of the shortcomings? Justify your response.

2.(a) How do Koch’s attitudes and behaviors influence the work atmosphere and coordination of the project team? (b) What other factors are involved?

3.(a) If you were asked to consult with the project team, what recommendations would you make to improve the performance of the project team? (b) What recommendations would you make to improve the newly developed personnel selection system?.

S w
SYSTEM Professors Diana E. Krause and Reiner Piske wrote this case solely to provide material for class discussion. The authors do not
intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names
and other identifying information to protect confidentiality.
Ivey Management Services prohibits any form of reproduction, storag e or transmittal without its written permission. Reproduction of
this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to
reproduce materials, contact Ivey Publishing, Ivey Management Services, c/o Richard Ivey School of Business, The University of
Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail [email protected]
Copyright © 2007, Ivey Management Services Version: (A) 2007-12-11 On Monday morning at 8:30 a.m., Dr. Thomas Koch was leaving his luxury condominium on the 28th
floor of a building specifically constructed for expatriates and Hong Kong‟s wealthier citizens. He was
going down to Causeway Bay, towards his office in Hong Kong‟s central business district. On the way,
Koch listened to the voice mail messages on his cell phone, one of which was from the assistant of the
firm‟s owner, Peter Koenig. The message stated that Koch was expected to call back before his meeting
with the human resources (HR) team that he was leading. The human resources team meeting was
scheduled in order to bring together German and Chinese human resource experts to form a crossfunctional project team. In the context of global restructuring, the company, ComInTec AG & Co
(ComInTec), had introduced a new regional management level. As a result, 25 middle management
positions were expected to be filled in the Asian-Pacific-region (APAC) (e.g. regional head of purchasing,
regional head of supply chain management, national chief executive officers (CEOs), national head of
finance and accounting, and national head of operations). A new personnel selection system was expected
to fill these positions with qualified employees. ComInTec‟s own recruitment channels, as well as “head
hunters,” would be hired for the recruitment process. The overall responsibility for implementing the new
personnel selection process was the responsibility of the project team. According to the company‟s inhouse global localization policy, 90 per cent of the new management positions were filled by individuals
who originated from the country they would be working in. The affected areas included sales and
marketing, purchasing, supply chain management, and finance and accounting, at locations in Hong Kong,
Kuala Lumpur, Bangkok, Jakarta, Melbourne, Sydney and Shanghai. The managers‟ annual salary ranges
between €40,000 and €150,000, depending on the location. The new personnel selection system for APAC
was part of the company‟s new objective to standardize all human resource instruments for selection
purposes around the globe. This new personnel selection system had to be developed internally. Purchased by: lakeeta beavers [email protected] on March 05, 2014 Page 2 9B07C041 BACKGROUND When Koch first heard about the above changes, it immediately occurred to him that this would not be
easy. He knew that personnel selection procedures currently varied significantly between countries. He
also knew that the existing selection instruments were by no means flawless in any specific country. After
the application documents were analyzed, structured interviews with the candidates were conducted by a
department representative and an HR specialist. If both interviewers came to a positive conclusion on the
candidates‟ qualifications, the top candidate completed an individual assessment centre in order to point
out his/her interpersonal competences rather than his/her professional competencies. The individual
assessment centres consisted of biographical questions, case studies on leadership in an international
context and participation in a leaderless group discussion. Ultimately, additional references were obtained
for each candidate, although different procedures existed in different countries. For example, references
gathered in Asia only confirmed a candidate‟s previous function and duration of employment according to
common employment law. After reference checks were completed, each candidate received written
feedback and a report was generated and added to the successful candidate‟s personnel file.
For several years now, Koch had been finding faults in the design of the individual assessment centres.
According to Koch‟s opinion, there was only very limited opportunity to influence possible modifications
because the individual assessment centres were conducted by external consulting firms. Additionally, Koch
questioned the validity of the information obtained from the centres, as well as the personnel selection
system as a whole. ComInTec had little interest in empirically evaluating the validity of the assessment
centres and statistically analyzing the outcomes of such personnel selection procedures. Koch also felt the
need to improve the contents of the structured interviews that were based on the candidate‟s current
situation, as opposed to the candidate‟s previous work experience. Koch firmly believed that what
happened in the past was likely to be repeated in the future, and therefore had very little appreciation for
selective interviews that did not consider the candidate‟s past. Overall, efforts to improve the current
selection systems had only rarely been undertaken due to limited time and the budget allotted for personnel
affairs — a memorable fact that Koch had already pointed out to the management several times.
The development of a new multinational personnel selection system now posed a huge challenge for Koch
and his project team. There was one fact, however, which he noticed with relief: there were no expatriates
in the new selection system because the selected managers were required to be living in APAC. Currently,
ComIncTec simply sent those candidates abroad that had the necessary technical skills and experience,
regardless of intercultural competencies. Koch remembered how difficult it was at times to find someone
willing to move his or her centre of life, including family, to a different country. He also knew from his
own emigration experience that no training (e.g. language or cultural norms) was offered to prepare him.
With this in mind, he hired staff for his project team that would globally represent the countries involved: a
Chinese research assistant who completed a bachelor in HR management, another trainee from China, and
a German intern who had completed four semesters in psychology. The team, which also included
additional HR managers from the headquarters office, had already been working on the development of the
new personnel selection system for four months. Over the past few weeks numerous meetings had been
held, yet no significant progress had been made. One reason could be attributed to the fact that there was
obvious heterogeneity between the German and Asian team members‟ opinions regarding the new
personnel selection system. This created an ambiance that was tense and dissent with respect to sharing the
workload. For today‟s meeting, the goal was to come to a consensus on several important issues: (1) what
individual modules the new personnel selection system should contain, (2) whether country-specific
adaptations were necessary and feasible for each module, and (3) the implementation process of the new
personnel instrument at each APAC location. The APAC-situated plants were the company‟s top-selling
ones; therefore, any wrong decisions with respect to HR (e.g. personnel selection) were extremely cost- Purchased by: lakeeta beavers [email protected] on March 05, 2014 Page 3 9B07C041 intense. The personnel selection system in APAC, as a whole, would have large-scale consequences
affecting the entire company.
As Koch was walking in the crowded Causeway Bay area he was not paying much attention. To Koch,
who could not distinguish between Asians, it seemed as if they were crawling across the streets like ants,
all busy on their phones. As usual, it was a very hot day. For Koch, now 48 years old, this was intolerable.
He took off his light-coloured linen jacket and placed his tie, threatening to strangle him, in his brief case.
He had returned from a business trip in Sydney the previous Saturday and was still feeling the effects of
the lengthy flight. The next business trip was scheduled for the upcoming Thursday — off to Jakarta for a
week, Shanghai, then Munich for a meeting of the Global Steering Committee Human Resources. He
checked his schedule and remembered the phone call he received earlier from Koenig‟s assistant. Koch
would be arriving at his office within 10 minutes, which allowed him time to return Koenig‟s phone call
before the scheduled meeting.
It had been 17 years now that Koch had been working in the HR department for ComInTec and three years
in the regional headquarters in Hong Kong. After working many years for ComInTec he was currently the
HR director, thanks to his determination, networking skills, ability to be highly adaptable to new situations,
and his talent to be at the right place at the right time. He was in charge of all HR decisions within
ComInTec in APAC. ComInTec was a worldwide leading industrial company with administration, plants,
and sales offices in Central Europe, Eastern and Western Europe, APAC, Central and South America, and
North America. Like many other companies, ComInTec was forced to establish downsizing procedures
between 2003 and 2006. Worldwide, 900 jobs were cut. Koch was actively involved in the staff cutbacks
that had taken place. He had visited the plants, equipped with PowerPoint presentations that had been
verified by the executive board to be politically correct. He spoke to the workers and praised ComInTec‟s
ethics and corporate philosophy, despite the cutbacks. He communicated the cutbacks to the workers as a
temporary crisis, pointing out that it was mainly due to natural fluctuations and that it was part-time
employees who were cut, with the affected workers being offered fair compensation packages. In
consequence of the general economic situation in the years of 2003 to 2006, ComInTec unfortunately had
no other option. He additionally thanked the staff for their loyalty and appreciation with personal gifts and
reports in the company‟s internal newsletter. Since then, the company had recovered from the crisis.
ComInTec employed 23,000 employees worldwide and made more than €5.8 billion in sales.
Koch arrived at the elevator to his office. He was surrounded by Asian colleagues in the best mood, all in
uniformly grey suits, greeting each other as they waited for the elevator. When he got off the elevator,
there were two of the three Chinese secretaries serving tea and fruits. His appearance always caused a
general haste among the secretaries. They all confirmed his daily appointments, signifying that his work
day had officially commenced. Koch called on a secretary, who came running on the double, accompanied
by a “Yes, sir!” and a big smile, yet she avoided eye-contact by looking down to the floor. She reminded
him that Koenig was waiting for him to return his call. Without being able to name a cause for it, this
secretary‟s behaviour triggered uncertainty in Koch. All her gestures appeared submissive as she
perpetually nodded her head — regardless of praise or dispraise — always understanding and friendly.
Koch picked up the telephone and Koenig instantly began speaking:
Mr. Koch, you know how much I appreciate your dedication to the company, but I have
concerns about the current international selection procedures. We need something that is
going to work, and work immediately! And don‟t you dare try to offer me this empirical or
validity stuff. I don‟t give a damn. You have a whole department with highly qualified
people. I assume you are capable of filling these vacant management positions. We also
need a selection system that works everywhere. We cannot afford to apply different Purchased by: lakeeta beavers [email protected] on March 05, 2014 Page 4 9B07C041 procedures in every country. What we need are consistent procedures, something
applicable cross-nationally and cross-regionally. You, as a cosmopolitan, should know
exactly what I mean. I also expect everything to be documented to a tee.
Although Koch shared Koenig‟s enthusiasm for an improved personnel selection system, there were many
complications that could arise of which Koenig seemed obviously unaware. As sensitively as possible and
with all due respect, Koch tried to inform Koenig about possible problems. First, Koch argued that
although a multinational personnel selection system could have its advantages, these advantages may
become costly when they are not easily implemented in each region. Each country had its own unique
economic and education situations, which would undoubtedly become problematic when creating a
universal personnel selection system. Koenig should only think of Thailand, for example, where it is more
difficult than anywhere else to find qualified managers. With respect to cultural differences, Koch argued
that a standardized personnel selection system would also most likely ignore cultural differences and
culture-specific circumstances. This would not only affect the individual modules of the system, but also
the basic job requirements, the adaptation of modules to specific countries, and the use of specific
personnel selection methods.
Koch also expressed his concern with Koenig‟s lack of interest in testing the validity of the new selection
Mr. Koenig, something that is expected to work should be tested thoroughly. This is the
only way to be certain that it will actually work. We will need to test and then evaluate
each and every single module in each country. This process will provide a basis on which
we will be able to improve the original procedures. Due to all the possible problems that
may arise with the new system, it is imperative that we invest in developing it properly.
Of course, that wasn‟t exactly what Koenig wanted to hear:
Don‟t tell me about problems, I want solutions, and you should not forget that this is what
I pay you and your team to do. You have until the end of this week to deliver final and
written conclusions of this matter. If not, I will reduce your team in Hong Kong by half,
and I will delegate the development of this new system to global headquarters.
“Mr. Koenig,” Koch replied, “please keep in mind that my team has been working on this assignment for
months, including weekends.” Nevertheless, Koenig underlined Koch‟s point of view with the
commanding tone typical of him: “Either you will come up with something useful by the end of this week,
or central headquarters will do the job. End of discussion.”
Koch responded:
Mr. Koenig, we have known each other for 17 years now and you know that I always do
what‟s best for this company. I strongly believe that as your HR manager, it is my
responsibility and duty to inform you about possible risks and problems that may exist
with an ad hoc-developed and unevaluated multinational personnel selection system.
Koch advised Koenig again that his demands could lead to severe difficulties. Koch also added:
Mr. Koenig, please remember the problems we experienced a few years ago with respect
to staffing cutbacks. You wanted to send employees, who had been working for the Purchased by: lakeeta beavers [email protected] on March 05, 2014 Page 5 9B07C041 company for many years, home without any kind of termination pay. Everything was to be
done by us, without any kind of external consulting. I assume you remember that I told
you in advance how risky such a staff reduction can be. I am certain that you will also
remember that I informed you that the legal process would create a high financial risk to
the company with employees with legal action seeking claims for damages and
compensation. At the time you had underestimated the situation, and as a result our legal
department had to deal with all the consequences. We were lucky that our lawyers were
able to win most of the cases.
Koenig was listening to these remarks with irritation and responded:
Dr. Koch, I am at the end of my tether with you. You need to stop focusing on the past.
It‟s all water under the bridge. We are now looking at 25 people we want to hire. This is
my company and not yours. I will be participating in today‟s meeting via video
conference. I expect you to prepare everything at once so that the video conference will
be working. And don‟t forget that I have put you in charge of the entire new personnel
selection system.
Koch would need to accept the fact that all of his objections to Koenig‟s instructions fell on deaf ears. He
knew Koenig well enough to understand exactly what he wanted and that he would not change his mind.
For Koenig, endless loyalty to the company, endurance, a hands-on mentality, and assertiveness were most
important. He was known for his strong control orientation not only by the members of the global steering
group, but also by the plants‟ employees. Two weeks prior, he went to Malaysia unannounced and snuck
into one of the plants in order to see the night shift‟s work with his own eyes. In addition, every executive
knew that Koenig had established staff employees, so called key functionaries, in every country. The task
of these key functionaries, or spies as Koch liked to call them, was to report to Koenig about everything
that was happening on site in detail, particularly any wrong doing of management. But Koenig did not trust
these key functionaries either, with his motto being “Trust is good, control is better.” Only if there was 100
per cent agreement between headquarters and the key functionaries was he willing to attribute a certain
degree of credibility to the situation.
Koch could therefore understand the tactics of Koenig because they somewhat resembled his own tactics.
Koch, nevertheless, had difficulties with Koenig‟s control procedures because they directly affected him
and his team. In response to these procedures, Koch had established in APAC that each meeting and each
decision that was to be made must be recorded by three individuals. Piles of paper were accumulating in
his office as a result, and even special storage rooms were needed to store the paper masses. Furthermore,
Koch remembered the intention coming from the central HR department, to standardize all personnel
selection procedures including all criteria and approaches around the globe. This matter ended in talk due
to conflicts regarding this question. With all this in the back of his mind, and the increasing pressure on his
shoulders, Koch remarked to Koenig at the end of the phone call that the meeting would possibly take
several hours, and that he assumed Koenig would not like to spend his precious time listening to every
single detail regarding APAC‟s selection system. Koenig agreed that attending the meeting via video
conference would not be in his best interest with respect to time, but instead insisted even more that he
receive the final draft of their decisions and the meeting minutes by Friday.
Koch was proud to have successfully appeased Koenig‟s concerns for the moment, and he next turned his
focus to the scheduled meeting. He was horrified when he glanced at his watch and realized that it was
already 9:30 a.m. He jumped up abruptly from his desk and left for the conference room. When he arrived,
his whole team and an unknown staff employee from global headquarters, probably a key functionary, Purchased by: lakeeta beavers [email protected] on March 05, 2014 Page 6 9B07C041 were already waiting impatiently. In order to keep the meeting attendees occupied while they waited, the
thoughtful secretary was serving coffee and snacks, resulting in a second breakfast for many of them. Koch
welcomed everyone, apologized for being late, and began the meeting, “We are here today to decide about
the future personnel selection system for APAC, which, when complete, will influence the complete
international employee selection system within ComIntTec considerably.” After these introductory words,
he asked the German intern Sarah Goldmann and her Chinese HR assistant Dai Wei to record the meeting
minutes. Koch continued, “I need everything we discuss here today to be recorded in detail. The records
must happen with the precision of a surgeon!” The German team members threw disfavouring looks at
each other; however, the Asian team members approved of the instructions by nodding their heads. Koch
Well, I ask today that you all present results from the past few months of hard work. I am
only interested in the results and would like to avoid any long discussions concerning
details. Mr. Koenig expects our final decisions in writing this upcoming Friday. In the case
that he does not approve our recommendations, this project will possibly be passed on to
global headquarters. As a result, we will lose team members. You now know the
importance of our meeting today. We need to legitimize our right to exist.
The Chinese colleagues agreed by nodding their heads uniformly. Koch noticed that this behaviour was
always to be expected when there was an order from a member with higher hierarchical status. From
Koch‟s perspective, this was a phenomenon reflecting cross-cultural differences (see Exhibits 1 and 2). He
often asked himself why his Chinese colleagues seemed to forget all priorities regarding time and content
as soon as there was an order coming from someone higher in the hierarchy. How often did he observe his
Chinese colleagues change their work completely and without any objection according to the orders of
someone with higher status? Koch quite often got the impression that his Asian colleagues and co-workers
followed the principle “Seniority is king.”
Yue Yu, a Chinese HR employee, rose to speak. In her concise way, she stated:
One crucial question concerns the definition of the job requirements and their profiles.
After several discussions we have come to the conclusion that the positions to be filled
differ in their content. Hence, we plead to define the job requirements specifically for each
position, and to allow flexibility of the job requirements for other positions. More
precisely, we want to diagnose 15 dimensions: five components that test the candidate‟s
professional competencies, and 10 dimensions that evaluate social competencies.
Andreas Mueller, the German economist who possessed extensive experience in HR management,
countered Yue Yu: “You must be joking. The inclusion of 15 dimensions is not what our team has decided
on. That is your opinion, which is not shared with anybody here. I told you many times that the acquisition
of 15 dimensions is simply impossible.” “Yes, that‟s what you said earlier,” answered Yue Yu, “but I find
we should establish as many dimensions as possible.” “Well, I disagree,” Mueller continued, who could
not stand being interrupted, “It is important to define clearly distinguishable job requirements that are
measurable, describable, and that are equally relevant in all countries of APAC.” Yue Yu, intimidated by
her German colleague‟s manner, blushed and looked down towards the floor, signaling that she did not
dare to say anything further. Yue Yu often found it difficult to cope with negative feedback, particularly
when it occurred in front of her colleagues. There had been several times already that she could not stand
up to Mueller, which seemed to affect her more and more each time. She had once spoken to Koch about
her difficulties communicating with Mueller; however, Koch was quickly irritated by the complaint and
asked her to wait and hope for an improvement of the situation. Koch assumed the confrontation between Purchased by: lakeeta beavers [email protected] on March 05, 2014 Page 7 9B07C041 the two colleagues was generally just a misinterpretation due to cultural differences (see Exhibits 1 and 2),
and told her to bring the matter to his attention again only if it was absolutely necessary. Yue Yu never
discussed the situation with Koch again.
The German, in-house psychologist Sabine Weitmann, who was known for her differentiating thinking,
decided to join the discussion:
In my point of view, the question regarding the number of dimensions is only secondary.
It is important that we first establish the contents of the job requirements. I suggest we
replace the term job requirements with the more modern term competencies. In my
opinion, a multinational requirement profile should contain compete...

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