In Control, 10 Time Zones Away

By Amanda Ripley

One of the small triumphs of global commerce is that anyone who craves Cajun-spiced drumsticks can now find them at 285 Popeyes Chicken & Biscuits restaurants in 21 countries, from Australia to Saudi Arabia. But the worldwide spread of America's fat-drenched fast food is an old story. What's new is the way that more and more of these businesses are run: by managers based in the U.S. who direct and assist their overseas branches through the Internet, e-mail, phone and videoconferencing. Call them virtual bosses. They offer a more efficient way for hundreds of U.S. multinational firms--from restaurant franchisers and hoteliers to Web-hosting firms and chemical manufacturers--to export management expertise without having to relocate key personnel to other countries.

From a high-rise office building just off a freeway in suburban Atlanta, for example, the eight virtual bosses of Popeyes last month orchestrated a restaurant opening in Iceland, designed a new outlet in Honduras and handled a chicken-supply crisis in Fairbanks, Alaska (which is so far from both the Atlanta headquarters and its vendors that it's treated like a foreign outpost).

The breast-and-thigh emergency at the new Popeyes outlet in Fairbanks landed in the e-mail box of Karen Youstin, 43. She's Popeyes' director of international training and operating systems, based in Atlanta. She explains that the hard part about opening a Popeyes in a remote location is not getting people to come for the chicken; it's getting the chicken to the people. Popeyes' chicken is always fresh, never frozen, and the chain normally requires that shipments spend no more than eight days traveling from farm to franchise. But it will take 12 days to transport the chicken by truck and ship to Fairbanks--a detail that the local supervisor of the franchise realized just 20 days before the store was scheduled to open.

Transporting the chickens by plane would work, but the freight bill would push the price of a three-piece dinner into the realm of surf and turf. After two hours of e-mail, phone and fax consultations, Youstin has a solution: vacuum-pack the chicken, for a small additional cost, and keep it fresh enough to survive the extra four days of shipping. From the corporate headquarters, Youstin can quickly access the company's experts and key decision makers to craft a timely fix. Explains her boss, international COO Anthony Pavese: "We are ground zero. We have centralized the information base. We can't just jump on a plane every time we need something somewhere."

Only a few years ago, almost all U.S.-based franchising chains and other multinational businesses opted to send American managers to oversee their foreign offices. Lately, though, skilled U.S. managers have been saying "no, thanks," when asked to move their families to Guam or Glasgow. Relocation abroad is harder for the growing ranks of two-career couples. Another reason: a tight labor market obliges companies to accommodate their managers' preferences.

At the same time, technologies for videoconferencing, Web conferencing and intranet sites have improved in quality and price and have spread around the world. They have made virtual management not only possible but preferable for many companies. Of 82 large multinational firms surveyed by PricewaterhouseCoopers in 2000, 24% allowed home-based employees to manage operations in another country instead of forcing them to relocate. A higher proportion of firms took the more traditional route of sending their managers to live in foreign countries. But looking forward, most companies said they expected to adopt the virtual approach at a much faster rate.

"The war for talent has compelled a new way of thinking," says Tom Casey, head of the talent-management practice at Unifi Network, a PricewaterhouseCoopers division. Casey is based in Boston but oversees projects involving 40 people in eight countries "all over God's creation." He also advises other companies on virtual-boss setups. The biggest adjustment for U.S.-based managers, he says, is learning to trust out-of-sight employees. Just because they are in a land far away and aren't always right by the phone doesn't mean they are sipping umbrella drinks at the beach. Despite managers' fears, most employees work as hard or harder in a less-structured environment, Casey says. "They like the freedom."

The No. 1 reason why managers decline overseas assignments is a relatively new one, according to the PWC survey: they don't want to fracture a spouse's career. The second most common explanation is that they don't want to disrupt their children's education. Not surprisingly, virtual managers report much less stress than employees who commute or relocate.

And the companies appreciate the savings. "We have a very thin team, and the only reason we're able to do that is technology," says Glen Helton, vice president for operations at Popeyes. A scant six managers actually live abroad, each overseeing nearly 50 Popeyes franchises. "We've been able to have fewer employees with greater skills, instead of having more employees with fewer skills."

To be sure, virtual management is not for everybody. Projects that require continuous give and take--like the development of public relations campaigns or new software--often require in-the-flesh management. The ideal virtual assignment is a long project with plenty of clear milestones. According to a WorldCom study released on March 14, technology companies are almost four times as likely as other companies to have a formal policy encouraging virtual management. That may be because tech companies are generally more willing to invest in the hardware and software that are needed to make long-distance supervision work. "Surprisingly, one of the biggest problems is that some people will not fork over the cash for the technology," says Mareen Duncan Fisher, a consultant based in Portland, Ore., and co-author of The Distance Manager.

The vast majority of the 510 business people surveyed by WorldCom rely on old-fashioned e-mail and telephone conference calls. But almost 20% now use Web conferencing--the latest and greatest long-distance communication tool that combines phone conferencing with visual interaction. Participants can see one another while conversing and can simultaneously look at maps, slides or software demonstrations. Web conferencing is still new to most companies, but it's catching on fast. In the WorldCom survey, a slightly greater number of companies reported using Web conferencing than videoconferencing. Jaclyn Kostner, president of Denver consulting firm Bridge the Distance, says that Web conferencing, if it's done right, far surpasses other technologies. People can brainstorm on an online white board or cast anonymous votes with a live poll. When their eyes and ears are occupied, they are less likely to do what people usually do during conference calls--check e-mail. "People sometimes leave our training and say, 'This was better than face-to-face,'" Kostner says. "They can collaborate faster."

A client of Kostner's, a large chemical company, had to change a manufacturing process to meet environmental, health and safety standards across 132 plant sites that use 12 languages. With Web conferencing, the company completed in 10 months a project that used to take five years. And it was able to save about $200,000 in travel costs, Kostner says.

Even simpler tools can make certain problems go away faster and shrink expense reports. In February, Cendant Corp. needed to design a facade for a hotel in Sharm El Sheikh, Egypt, that was becoming a Day's Inn. Architects and designers drew up rough drafts in the Parsippany, N.J., headquarters of Cendant's hotel division--which operates 6,440 hotels in 24 countries. Then the New Jersey team e-mailed the designs to Egypt and arranged a conference call with the franchise designers and operators in Sharm El Sheikh. "Before this, we would have spent $10,000 to $15,000 going out there, wining and dining them and coming back," says Eric Pfeffer, CEO of Cendant's hotel division. "Well, that's gone."

Still, there's no way to escape the airport entirely. Says Joe Raudabaugh, a vice president at the consulting company A.T. Kearney, based in Plano, Texas: "No amount of technology is going to take away the need to have a relationship with my boss." One-on-one mentoring helps retain skilled employees and motivates them to work harder and smarter. You can't export company culture over the Internet. And you can't build the kind of trust and loyalty that team members need to share when they are working under a deadline 6,000 miles apart. Virtual-management consultants say bosses must--at a minimum--visit in person when offices or projects start up and at major milestones.

At ServiceMaster's headquarters outside Chicago, international vice president Ralph Odman, 55, oversees pest control, housecleaning and other service franchises in 13 Asian countries. Technology has allowed the corporate office to become more involved in the franchises than at any other time during his 33-year tenure there, he says. He and ServiceMaster's team of three U.S.-based managers support franchises across six continents--helping implement new contracts and maintain quality standards. But Odman still packs his bags and goes to Asia about 10 times a year.

Perhaps the only thing more important than keeping in touch with current employees around the world is making sure that the company is hiring the best available new talent in each country. Scott Puritz, 44, is the CEO of OptiGlobe, a Web-hosting company that operates three data centers in Latin America--and that plans to build 14 more in the next year and a half. Of OptiGlobe's 350 employees, only 75 are located at the company's Bethesda, Md., headquarters. Puritz has never relocated any of his employees. "That's frightfully expensive, and it's going to take the employee two years to learn how to get it--between the language and cultural differences," he says. "That's the old model."

Instead, Puritz hires natives to oversee in-country operations. And he agonizes over each decision. He likes multilingual candidates, and he demands multicultural savvy--people who have worked for companies based in different countries, even if they themselves have never left Brazil. Says Puritz: "If people don't have that intellectual dexterity of understanding how other cultures work, they won't succeed in this business." That's a sentiment chanted over and over again by other executives at international firms. "You need to borrow the know-how of local culture and local law," says Cendant's Pfeffer. "It's important that you not project any arrogance."

Any company that just clones its U.S. model abroad will fail, Pfeffer says. For example, he adds, most European salespeople do not respond as well as Americans to commission-driven incentive schemes. As a result, many of Cendant's European franchisers pay their salespeople fixed salaries.

The customers' tastes vary tremendously too. At the first few stores that Popeyes opened in South Korea, customers were ignoring the red beans and rice combo. The Atlanta team learned from the franchise owners that red beans are usually served as a dessert in Korea. Within six weeks, the team had created Red Bean Slushes: beans and rice served over a mound of ice, topped with Gummy Bears and marshmallows. In the summer months, the slushes now make up more than 12% of Popeyes' total sales in Korea. "It takes some getting used to, but it tastes pretty good," says COO Pavese.

By keeping in constant--albeit virtual--contact with its restaurants, Popeyes achieved what all international companies hope for. First, export the essence of a solid U.S. business model (cheap fast food!). Then, adapt it to the local culture (top it off with marshmallows!). And finally, watch the new revenue--and savings on travel and relocation expenses--flow right to the bottom line.

--With reporting by Tim Roche/Atlanta and Maggie Sieger/Chicago

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With reporting by Tim Roche/Atlanta and Maggie Sieger/ Chicago