The Importance of Site Visits When Managing Your Overseas Operations

By Kathryn Polak, Director, Advisory Services

The hard work required to successfully establish a foreign subsidiary — detailed financial planning, frequent visits, governance meetings — never truly ends. Even once the overseas operation is up and running, the home office must still maintain close oversight of its subsidiary. This is particularly true for CFOs, controllers, treasurers and others who are responsible for ensuring robust strategic and financial planning and properly executing risk management, treasury and compliance functions. Though an out of sight, out of mind mentality might be tempting, it is critical to plan and budget for a program of regular site visits that will ultimately strengthen your business and help you to avoid unpleasant surprises.

It is a well-worn cliché that people are a company’s greatest asset. The trick is investing resources and time to demonstrate that, to develop talent and to make it feel valued. By visiting your teams overseas and listening to their concerns and ideas, you demonstrate that you value their contributions and are committed to their success. Ultimately, this will pay off in the form of a more productive workforce that trusts you and views the home office as a partner rather than an annoyance. Visits can also be an opportunity to establish relationships with other stakeholders such as important customers and key vendors.

Visiting is a way to hear firsthand the challenges faced by the local subsidiary. It is one thing to read declining revenue forecasts and another to see empty storefronts and speak with front-line employees about declining sales. Similarly, what may appear only as inexplicably high employee turnover when viewed from the home office may reveal itself to be organizational dysfunction when seen from the break room. Of course, a visit may also reveal positives. Perhaps you will encounter an energized team aggressively pursuing new opportunities, a market ripe for disruption or innovations that can be shared across the company.

A visit also has the potential to reveal areas of concern before they reach the attention of the home office. For example, by observing meetings and talking with the local team, you might identify actions that could run afoul of the US Foreign Corrupt Practices Act (FCPA) or other anti-corruption regulations and thus warrant further scrutiny. Once you have returned home, the relationships you have cultivated over the course of many years could pay off in the form of advanced notice about financial problems, whistleblowers alerting you to improprieties, or other valuable business intelligence.

Properly planning for visits is important both to realizing the benefits discussed above and to minimizing the disturbance to your own schedule and the normal operations of the subsidiary. Deciding which offices to visit and when should be part of a considered planning process that takes into account a number of factors, including the importance and potential risks posed by each subsidiary, how mature each operation is, and when would be the least disruptive and most productive time to visit. In addition, a generous lead-time will allow you to arrange meetings with third-party stakeholders such as important customers, key vendors, or regulators. To make the most of the visit, meetings should be driven by a clear agenda, but it is best not to be bound by it. Remember, visiting is as much about establishing relationships and opening ongoing dialogue as it is about addressing specific concerns.

Finally, a few notes of caution. First, be aware of the impact your presence may have on local personnel, who might view with alarm the unannounced arrival of a senior executive from the home office. Though the visit might have been long-planned and routine, it may set fire to distracting rumors and cause unneeded stress. For this I recommend a simple fix: Ask local leadership to share the dates of the visit in advance and explain the purpose of the visit with the rank-and-file via email the week before you arrive. Second, remember Ben Franklin's admonition that, "Guests, like fish, begin to smell after three days." Be mindful of the burden your visit places on local resources — resources that are often far more constrained than in the home office. Meetings, tours, and entertainment all require planning and time that can distract from everyday operations.

In an age of corporate belt-tightening, business travel can be an attractive target. Particularly for those corporate officers who must impose cost discipline, setting an example by reducing their own T&E expenses can seem a commendable undertaking. Indeed, it often is, but it is inadvisable when it comes at the expense of maintaining relationships with foreign subsidiaries. Regularly visiting overseas offices is an important tool for ensuring proper governance and compliance with regulations, identifying business risks and opportunities, and building strong relationships with key personnel and an understanding of the local market.