Going Global

Managing the HR Function Across Countries and Cultures

Cat Rickard, Jodi Baker

• Publisher: Routledge
• Year: 2017
• Print ISBN:
  9780367376369
• eBook ISBN:
  9781351932653
• Topic: Commerce
• Subtopic: Commerce Général

As organizations operate across countries and continents there is an increasing demand for the development of an HR function designed to deliver global support. This requires rethinking the structure of HR, how it is managed and how it operates. However, adopting a fully global model is not the right answer for all organizations. HR has a key role in determining the business strategy in terms of the required scale of operations (i.e. local/regional/global), and in delivering the business transformation required to realize that strategy once it has been agreed. As a result, HR must be both able and prepared to transform itself to support the new business model. Going Global outlines of the types of activity and capability needed to establish an HR function able to supporting business operations at a regional or global level. It focuses on two areas, the decision to go global and the activities needed to deliver a global HR function. This latter section targets three areas: designing the right service; building a cohesive team; and delivering HR talent. The authors point out some of the key decisions you will need to take, together with advice on your overall approach, and some of the lessons learned by other organizations along the way. About The Gower HR Transformation Series: The Human Resources function faces a continuing challenge to its role and purpose, in many organizations it has suffered from serious under-representation at strategic, board level. Yet, faced with the challenges of globalism, the need to innovate, manage knowledge, attract and retain the very best employees, organizations need an HR function that can lead from the front. The process of transforming the function is complex and rarely linear. It involves understanding and adapting to the needs of your offices in the various countries, cultures and markets within which you operate. All of which involves a highly complex and, often painful, process of change. The Gower HR Transformation Series will help; it uses a blend of conceptual frameworks, practical advice and global case study examples to cover each of the main elements of the HR transformation process. The books in the series follow a standard format to make them easy to read and reference. Together, the titles create a definitive guide from one of the leading specialist HR transformation consultancies; an organization that has been involved in HR transformation for clients as diverse as Bombardier Transportation, Marks & Spencer, Barnardo's, Oxfam, Schroders, UnitedHealth Group, Nestlé, BP, HM Prison Service, Transport for London and Vodafone.

PART I
Introduction

① Globalisation and HR

Overview

A title search on globalisation in the business section of Amazon will typically yield a results list of over 500 books. Refer to the USA Library of Congress Catalogue, and a brief search of books published between 2000 and 2004 will yield a list of more than 5,000 titles published during that period alone. Points of view within these publications vary from 'the world is flat' to 'the world is most definitely still round', and manage to encompass most shapes in between.

Over the last decade countries and their labour markets have made great strides towards global integration. Political and economic reforms have transformed developing countries (such as India, China and those in Eastern Europe) allowing them to compete with the world's superpowers. This ongoing globalisation of the labour market has drawn increasing attention from business commentators, who fall broadly into three groups.

First there are the sceptics: those that believe that, if you look back a hundred years, the presence of world trade and mass migration was extremely similar to what it is today. Essentially, sceptics ask the question 'what has changed?', and present the argument that where we are today simply represents the logical outcome of a continuum that was in train during the industrial revolution and continued right up to the outbreak of the First World War.

Next there are the semi-globalisers: semi-globalisers believe that there have been increases in cross-border integration but despite small similarities across borders, they recognise that many huge differences still exist. These differences prevent the development of the genuinely global organisation, and therefore provide real limits on the level of effort organisations should invest in going global.

Lastly there are the hyper-globalisers: this group believe that not only are there fundamental changes going on, but that these are so fundamental they have already transformed most of the basic systems and structures of the world. These views tend towards the apocalyptic, based as they are on the concept of complete internationalisation.

Controversial and extreme views grab attention and have always sold well, and a preponderance of literature points towards a relentless march towards a state of inevitable globalisation.

Barriers and Enablers to Globalisation

Were we in a truly 'global' world, you would expect to find no barriers to globalisation, or at least where barriers did exist, a clear set of mitigating actions to overcome them. A brief review of the current situation clearly demonstrates this is not the case.

Significant barriers exist that, while they may not preclude the development of global organisations, certainly put a significant dampener on the process. Although there has been a significant shift in geographic boundaries, in particular since the fall of the Berlin Wall, the nation-state continues to have a preeminent position on the global stage, resulting in significant political and administrative barriers to globalisation.

In addition, major obstacles exist in the form of legal barriers, intellectual property regulations and copyrights. The nature of worker protection varies significantly from country to country, and you only need to be asked to manage a European-wide redundancy programme to appreciate the complexities arising in this field alone. The effect of some of the more obvious local differences, including culture and geography, cannot be underestimated, while economic differences may both help and hinder globalisation.

It would be wrong however to jump to the opposite extreme and deny the existence of globalisation altogether. Over the last 20 years a number of enablers have developed to support the delivery of global operations. Technology has enhanced communications, and the growth of telecommunications, the web and effective workflow systems have enabled the delivery of distributed operations. These developments have facilitated the delivery of outsourced and offshored process solutions, further enhancing the geographic base over which solutions can be delivered. Technology changes have also revolutionised the supply chain process, and together with the emergence of new economies, such as China and the Far East, have encouraged the appearance of new producers and suppliers.

The delivery of operations across a global platform and the servicing of a global market is now feasible. However, this does not mean that organisations are necessarily global in terms of their strategy, structure and intent.

Where Are We Now?

At Orion Partners, we believe that economic activity continues to be split between the local and the global stages. The UNATD report now states that there are 63,000 transnational organisations, accounting for 14 per cent of world sales and 12 per cent of employment. There is therefore a mix of organisational focus at play currently, ranging from those with a local, to a regional, and ultimately a global focus. As organisations operate across countries and continents, so too there is an increasing demand for the development of an HR function to support them. This requires the need to rethink the structure of HR, how it is managed and how it operates.

Adopting a fully global model is not the right answer for all organisations. HR has a key role in determining the business strategy in terms of the required scale of operations (that is, local/regional/global), and in delivering the business transformation required to enable this vision once the strategy is agreed. As a result, HR itself must be both able and prepared to transform itself to support the new business model.

This book will provide an outline of the types of activity and capability that are needed to establish an HR function capable of supporting business operations at a regional or global level. It will focus on two areas, the decision to go global and, once taken, the activities needed to deliver a global HR function. This latter section will focus on three areas: designing the right service; building a cohesive team; and delivering HR talent. It won't address every issue, but will point out some of the key decisions you will need to take, together with advice on your overall approach, and some of the lessons learned by other organisations along the way.

② The Decision to Go Global

To decide whether to go global, you have to answer two key questions. Firstly does the organisation want to go global (and is it ready to do so); and secondly what is the best way to expand operations from a local or regional basis to a global model?

The HR team can provide critical input into both decisions, but is frequently precluded from doing so because organisations tend to adopt a narrow view focused primarily on the financial aspects of strategy. HR is often its own worst enemy when it comes to strategy development, adopting an attitude of simply being an enabling function, rather than being a key stakeholder holding key people-related information that is critical for sound commercial decision making

Organisational Readiness

Before determining a new business strategy, an organisation must review its readiness to shift to globally-based operations. Organisations that seek to change dramatically the shape of their operations, without adequate planning and reflection, often realise disastrous and unexpected effects on their commercial viability. Delivering clarity of vision, together with a realistic review of readiness, we will touch on all aspects of existing operations and how HR is well placed to facilitate and contribute to this debate.

The change skills of the HR team are critical in helping the organisation develop its vision for the new organisation. What will the new organisation look like? What will the end result look and feel like? How will success be measured? How far along the path to globalisation should the organisation go? Each member of the leadership team may have their own interpretation of the common goal, but it is imperative that they have a consistent and common understanding of the planned outcome, if lack of alignment is not to undermine the transformation from the outset.

Building an aligned leadership team can be achieved through focused discussion aimed at answering a series of structured questions. Key points to consider include:

• What are the benefits of globalisation for our organisation?
• Could these benefits be achieved through pursuit of local or regional strategies?
• What are the issues we face if we do not change?
• Do we intend to globalise through:
  • - Adapting to the differences between countries, to become more uniform?
  • - Overcoming the differences between countries through standardisation?
  • - Exploiting the differences between countries to gain competitive advantage?
• What markets do we aim to compete in (local/regional/global)?
• Are we prepared to relinquish our home base?
• What will our future organisation look and feel like?
• What are the barriers and enablers to the transition (internal and external)?
• How will we measure success?

The level of organisational inclusion in the debate will vary from organisation to organisation. The results of these discussions will form the basis for the new business strategy, and must be summarised formally in a clearly articulated way, that will be understood by staff across all territories and business units.

Organisational Transformation

Having established the imperative and vision for the organisational transformation, you need to take strategic decisions on the method that will be used to achieve your vision.

Although the current economic turmoil of 2008/09 has temporarily damped down activity, globalisation has exponentially increased the market for cross border mergers and acquisitions, offshoring deals and joint ventures. In 1996 alone, there were over 2,000 cross border transactions, worth close to $300 billion. Strategies for expansion included:

• Cost savings through consolidation, with the elimination of duplication and economies of scale often achieved through acquisitions.
• Revenue enhancement through the merging of complimentary strengths and capabilities.
• Process improvement through the transfer of non core competencies to specialist providers via global sourcing.
• Achievement of tax benefits through tax structuring and tax planning via joint ventures.

The execution of such strategies without the involvement of HR is perilous. In these circumstances, the case for the organisation to go global is based on the hard benefits of entering into new market territory, buying out competitors, and transferring the management of processes to others who will perform them better and cheaper. However, the achievement of these benefits is predicated on the contribution of HR to the transition plan.

In many cases, the HR due diligence on such transactions focuses simply on the financial aspects associated with, for example, executive remuneration, terms and conditions, and the likely pensions liability involved. This input is driven by the business case that underpins the transaction, which may focus only on the financial aspects of the transaction, to the exclusion of key considerations such as people, culture and styles of working, all of which define the long-term success of a global organisation.

Ignoring these human elements is dangerous. If overlooked, the strategy for global expansion may appear worthwhile on paper, but could turn out to be disappointing. A 1999 KPMG study highlighted that when only examining the hard facts (financial matters) in the case of mergers and acquisitions, one half to one third of organisations seeking global status didn't live up to their potential, up to 83 per cent didn't add value and even more worryingly, 53 per cent destroyed value.

Some of the highest profile examples are the AOL-Time Warner deal which lost 93 per cent of its value during the integration period and VeriSign which, while acquiring Network Solutions, lost $17 billion and experienced a 98 per cent fall in the value of their stock; all further evidence of the key role of HR in the process of going global.

The Contribution of HR to Realising the Organisation's Vision

Strong HR leadership should be at the forefront of the transformation. An important consideration for the CEO is the skillset required of the HRD and HR team to drive the process.

For example, within the food industry where a policy of acquisition and aggressive cost cutting is adopted, the retention of key individuals within the acquisition will be critical, while the loss of a large portion of the workforce (for example, the management layers to team leader level) will be highly desirable. The HR department in this instance would need to be well ...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Contents
• List of Figures
• List of Tables
• Part I Introduction
• Part II Delivering a Global HR Function
• Part III Case Studies and Conclusions