Working across many
cultures at Western Union
The CEO
of the global money-transfer company explains how it brings in the
multicultural voice of the consumer through a broadly diverse team of top
executives.
When Western Union
Holdings CEO Hikmet Ersek
rang the opening bell of the New York Stock Exchange in May 2015, it marked 150
years since the WU ticker was the first listed on Wall Street. Few businesses
are as long lived. Western Union is one of only two companies still left from
the original 11 in the Dow Jones Transportation Average.
Since its founding,
Western Union has played a prominent role in American culture and commerce. The
company built the first transcontinental telegraph line across the United
States in 1861, issued one of the first consumer charge cards in 1914, launched
the first domestic commercial satellite into orbit in 1974, and sold the first
prepaid telephone card in 1993—not to mention sending the first CandyGram in
1959. Some of the world’s great tragedies have played out by Western Union
telegraph. These include the last message sent from the Titanic, a
distress call reading: “SOS SOS CQD CQD Titanic.1We are sinking fast.
Passengers are being put into boats. Titanic.”
You can’t send a
telegram by Western Union anymore, but the company continues to thrive at the
forefront of the cross-border, cross-currency money-transfer and payments
industry. Across more than 200 countries and territories, the company has more
than half a million agent locations, and it offers services through more than
150,000 ATMs and kiosks, along with the ability to send money to billions of
accounts. In 2016, Western Union completed 268 million consumer-to-consumer
transactions and 523 million business payments world-wide, moving more than $150
billion of principal for consumers and businesses.
McKinsey’s Kausik
Rajgopal and Lang Davison recently sat down with Western Union’s CEO to talk
about its multicultural customer base (and leadership team), finding the
simplicity within complexity, and how Ersek surprised everybody with his choice
to lead the company’s digital innovation lab in San Francisco.
The Quarterly: Western Union has a big
global network of agents on the ground in a wide variety of countries. What
makes this network distinctive?
Hikmet Ersek: For one thing, our customers
aren’t like those of many other companies. We actually have two types of people
we serve, the sender of the money and the person who receives it. For example,
the sender could be an immigrant from a rural part of Tamil Nadu, who’s left
India to find work in Canada. In this case, we have to understand that his
relatives—the receivers—are in Tamil Nadu. They’re not in Punjab; they’re not
in Pakistan. And that understanding has to drive where and how we open locations
in Tamil Nadu, as well as where and how we open them in Canada. That’s a bit
more complex than opening a typical retail location.
But what really sets us
apart is the interplay between our digital business and the retail network. Our
senders can send money from the phone in their hand, and the receiver can pick
it up in cash. NGOs [nongovernmental organizations] can send money from their
global headquarters in London, and their fieldworkers can pick it up in cash in
a conflict zone. In India, parents of a university student in Canada can give
cash to our agent in Mumbai, and the tuition payment is made to the
university’s bank account.
In order to build a
unique physical and digital network like this, you can’t sit in a corner office
in Denver or San Francisco. You have to be in and understand the diverse
marketplaces in the world. There is a lot of fundamental prework that has to
occur before you can open anything. First you have to negotiate with the
reserve banks. You have to talk things over with the regulators. You have to
find the right agent for the location. And you have to begin all this with the
voice of the customer in your head.
Many people say the
voice of the CEO is very powerful. I don’t think so. The voice of the customer
has more power. But if you can combine both voices in your day-to-day actions,
it’s even stronger.
The Quarterly: You have built this network
during a unique historical time, too.
Hikmet Ersek: Yes, to be fair, we have been
lucky. Globalization has helped us—the expansion and mobility not only of goods
and information but also of the global workforce. The increased movement of
people across borders has been very helpful to our expansion. Globalization has
also helped us have a unique brand. People may not speak English, but they
recognize Western Union. Ours is a global language for moving money to support
your loved ones. That’s Western Union.
The Quarterly: That would seem to put a
premium on multicultural skills within the organization.
Hikmet Ersek: It does. Our customers have
broadly diverse religious celebrations, school systems, languages, and beliefs.
A multicultural understanding of these differences is required if we are to
stay close to our customers—not only the senders and receivers of money but
also the bankers, regulators, and agents. You need a multicultural competence
simply to select the right agent for a given location, or to create the right
app for a given country, one that reflects our brand in the right way. Cultural
differences are complex, and therefore our business is, too. Thank God it’s
complex. If it weren’t then maybe we wouldn’t be so successful.
The Quarterly: What kind of management approach
do you need for this unique customer context?
Hikmet Ersek: Our people need their own
multicultural competency if they are to understand the diverse needs of our
customers. I call it “cultural dancing.” You don’t have to be Filipino to have
that competence. You don’t have to be Indian or Turkish. But you do have to be
open-minded to people’s needs and willing to step away from the perspective
with which you see the world.
You also have to be
willing to look beneath the surface, to look beyond the apparent first meaning
of the words someone is using. Because the person speaking may not be using
their primary language, it’s up to the listener to actively participate in
finding out what the person actually means by what they say. If you’re only
used to your home culture, you don’t have to do that. You can take things more
at face value. But if you grew up in a multicultural environment, you think to
yourself, “Maybe they didn’t mean it exactly like it sounds. Maybe there’s a
second thought, a second meaning behind the first one.” That openness is
important if you are on my leadership team.
By the way, I find that
people in the US are more multicultural than they are given credit for. The
business leaders in the US adapt themselves more easily than do those of some
other countries. Perhaps one reason is that the US is built with and by
immigrants. This country has an understanding of immigrants and an openness to
diverse cultures that isn’t always present in other countries. I hope that
doesn’t get put aside in the new political environment that seems to be
emerging in the US.
The Quarterly: Your customers are diverse.
And your leadership team is similarly diverse, right?
Hikmet Ersek: Among the nine executives
that make up my top leadership team, we have 13 nationalities. These leaders
have together worked in more than 40 cities globally—from Kabul to London, from
Frankfurt to Riyadh. So they’re truly international, but they also have deep
market experience, which enables them to stay connected to our diverse customer
base.
The Quarterly: How does that diversity play
out in your leadership assignments and in the roles you ask your leaders to
take on?
Hikmet Ersek: I’ll give you an example. A
few years ago, we decided to open a new office in San Francisco with a team
that would be responsible for building WU Digital, Western Union’s digital and
mobile business, a start-up within the broader company responsible for
reinventing and expanding our money-transfer business for the mobile age. Who
did I pick to lead this new effort? Not a cool, new tech genius from the Bay
Area and Silicon Valley. I picked the leader of our Africa business, Khalid
Fellahi. I picked someone who has the multicultural competence we’re talking
about, the understanding of our diverse customer base and their needs. Even a
new start-up within the company has to begin with the voice of the customer,
and that’s what we got with Khalid. With that in place, he then hired 250 smart
people from Silicon Valley, including the many engineers the effort needed. Now
our digital business is the fastest-growing part of Western Union.
Our people need their
own multicultural competency if they are to understand the diverse needs of our
customers. I call it ‘cultural dancing.’
Many companies or
investors would never dream of pulling a leader out of Africa to establish and
run a multimillion-dollar digital business in the heart of the Silicon Valley.
In fact, many people, both inside the company and out, said, “What are you
doing?” Even Khalid was surprised. But I believe that if you understand the
voice of the customer, then everything else will follow thereafter. And I think
this decision was the right one, since WU.com has been growing in the double
digits.
The Quarterly: Are there downsides to being
multicultural?
Hikmet Ersek: Well, the upside to
multiculturalism is you tend to learn quickly. But the downside, to generalize,
at least, is that multicultural executives tend to be a bit less disciplined.
Something about dancing between cultures that means you can sometimes be less
disciplined. Or at least that it doesn’t come naturally; you have to learn it.
You may have an ability to be forward looking and visionary, but you have to
look backward, too, in order to fix what’s less efficient and effective. So the
question becomes how you combine those two things in an organizational culture.
I was fortunate to have
been trained in one of the best places, General Electric, where I spent the
first years of my career. Jack Welch was one of the first guys to bring Six Sigma
to Europe. And Six Sigma is all about discipline, even if it’s not exclusively
that.
The Quarterly: Does that mean, that you’ve
brought Six Sigma into Western Union?
Hikmet Ersek: We’re developing our own
version of it, yes, with something called the WU Way. The WU Way is a kind of
lean-management process-optimization environment, a disciplined approach based
on the voice of the customer that can help this multicultural organization
increase the discipline it needs.
The Quarterly: One area the company has had
to instill discipline is in the culture of compliance, given the regulated
environment in which you operate. And in 2017, Western Union paid a $586
million fine imposed by the US Justice Department and Federal Trade Commission.
Can you discuss some of the things you’ve done with regard to compliance?
Hikmet Ersek: When I became CEO in 2010, it
became clear that compliance was one of the first strategic areas that we
needed to invest in. The regulatory environment only continues to get more
complex, and we needed to invest in the relationships and infrastructure to
ensure we could succeed.
We announced the
settlement in 2017, but the truth is that the conduct at issue mainly occurred
more than five years ago. Over the past five years, we’ve made significant
enhancements and investments in our programs, and today we invest 3.5 to 4.0
percent of our revenue in compliance. Part of this investment is in
employees—more than 2,000 are dedicated to compliance—and in sophisticated
technology to help keep “bad money” out of the system. We also strengthened our
agent and customer education, and we put in place a new compliance governance
structure.
Today, I think we all
can see that globalization looks different than it did in 2010, and part of
what that means is that there is less harmonization of regulations than many
might have imagined. What that means for WU is that we believe these compliance
investments can become a long-term competitive advantage. We’re one of the
world’s most global companies, yet we have the relationships and infrastructure
to successfully navigate local regulations—across more than 200 countries and
territories.
The Quarterly: Did that mean creating a
compliance department?
Hikmet Ersek: We already had a compliance
department, but we decided that compliance had to be part of our culture as a
whole, and not just the responsibility of one department. So we created a
compliance committee at the board level, and then we looked to instill a
culture of compliance at the other levels of the company, too. The same way
everybody in a company is a brand ambassador, well, everyone has to be a
compliance ambassador. And they have to carry out their daily activities with
the discipline needed for compliance. For instance, every employee has to
complete a compliance training class and become certified. And the tests are
not easy, either.
It wasn’t popular on
Wall Street, by the way. Our stock took a hit when we announced we’d be
investing about 3 to 5 percent of revenues in compliance activities. It took a
while to tell the story, to convince them that we could create a long-term
competitive advantage.
The Quarterly: Describe your own growth as
an executive.
Hikmet Ersek: One of my biggest growth
areas has been to learn to put my own ego aside. Don’t think that I was always
like that. I learned it. It’s something that you learn over the years. I may
have my own ideas about something—for instance, about the importance of the WU
Way—but I have to carry that to my team, taking the time to do that properly. The
notion is to make your idea their idea. Then, once the idea takes hold, you
can’t say, “Well, it was my idea in the first place.”
In the past, I would
have said, “Hey, it was my idea first! Don’t forget me! I want to have the
credit!” Right? You develop over the years. Or you don’t. Some people never
develop. But being multicultural helps in this regard. You learn to adapt
yourself more easily, to learn and to grow.
The Quarterly: What else have you learned
over the years?
Hikmet Ersek: One thing I’ve learned is
that leaders have to balance the complexity of the world by keeping things
simple. Many people will show you how complex or how difficult an issue is. In
some cases, they may be right, but most of the time it is their insecurity or
they are just afraid to solve a problem.
As a leader, especially
as a business leader, in a complex environment, it is important to keep things
simple. If you have products and services that are too difficult to market and
do not match customer needs, you will lose. The advice from me would be to
create products and services that are simple for the customers. That will make
you successful. The communication and the marketing of the complicated products
and services, whatever they are—spaceships, medicine, hamburgers, or financial
funds—has to be simple. Also, the company’s vision and goals for the employees,
shareholders, board members, and all its other stakeholders must be stated
simply so that all over the globe, in any culture, in any language, the intent
of the message and the direction of the company are clear.
The Quarterly: How do you go about making
things simple?
Hikmet Ersek: I do it by asking “why.”
Asking why has been a recurring theme throughout my business life. During the
Jack Welch period at GE, I went through the Six Sigma training and learned the
concept of asking “why” five times. Asking why generates simple solutions that
overcome complexities.
By asking why, you can
be innovative, even within a long-established business, where your own success
risks blinding you to future opportunities and transformation. I started the
transformation at Western Union—into the digital era and into the compliance
era—by asking the question why, and it kicked off an entirely new set of
business solutions for our company to offer.
McKinsey Quarterly January
2018
https://www.mckinsey.com/industries/financial-services/our-insights/working-across-many-cultures-at-western-union?cid=other-eml-alt-mkq-mck-oth-1801&hlkid=13dc36af950745649012e6237b48caa2&hctky=1627601&hdpid=fa77941b-81a0-43d6-a733-b251a39b52cb
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