HR at the heart of international business

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written on April 28, 2015

The world feels smaller and now more than ever businesses are looking to drive their brands as far around the world as possible. To do this, they must focus on the advantages gained in developing human capital. They must have the best employees, regardless of where they are and these must be true advocates of the organisation they work for. Getting that bit right is no easy task.

I’ve been fortunate to work in HR for many years and my work has taken me right across the globe, in different countries with different laws, cultures and working practices. Every one of these countries has to manage the business of HR one way or another. The real constant is human beings coming to work, and that’s the same right around the world.

For the smart HR professionals, they recognise the importance of thinking globally whilst acting locally and that managing HR is a host country affair. However, more and more large multinationals have to bring their business of HR under one global roof. Why? Well, markets are rationalising, economies are forcing businesses to consolidate, and there is a drive for innovation and integrated thinking from around the world.

So, what does this mean for HR? And how do you present a global view of HR when the management of such is inevitably delivered locally?

The key is to operate as knowledge brokers across your HR network and enable global capability development and a cost effective HR service at a local level. Sharing best practice ideas among HR professionals is never going to be enough and any rational thinking must hold the view that whilst the central HR function may be able to provide the map, it cannot possibly know the territory of the business.

Often, large multinationals will split their HR functions into three core areas:

  1. Global HR
  2. Business Unit HR
  3. Country Management

Of course, the trick here is simply getting the balance right. Too much policy from centre forces business unit HR to have to translate policy into a strategy that might not fit across regions, therefore becoming diluted. Too little strategic direction from business unit HR leads to country management becoming less effective on global matters. It’s an ever-moving feast.

Essentially, creating a global culture requires a consistent way of thinking and in my experience, the really great organisations that get this right spend a significant amount of time and effort focusing on leadership behaviours. Indeed, “It is the people and the way they are managed that are more significant than other sources of competitive advantage” (Wright et al 1994).

Insourcing, outsourcing or offshoring HR shared service allows for businesses to save costs (eventually, once the cost of such a change has been recovered), and this common practice has had many successes, particularly with advancements in technology. However across different countries with different laws, languages, cultures and working practices, these shared services are often limited in their ability to deliver complex country-specific advice, hence the need for local HR resource or ‘country management’.

My challenge to any business operating globally would be to question how it will maintain the right level of HR expertise between the shared service model and local HR professionals. And does shared service come with a ‘one-size-fits-all’ approach to providing advice? If so, how much input will the local HR resource have on shaping and reviewing that advice? And what of the skills and capability of the HR shared service professionals? How will they match up to the variable country requirements? Or is the approach a safer, diluted one, and in which case does the costs justification become arguable?

I will always hold the view that there is a reasonable argument to centralise (globally) administrative, transactional, ‘general HR advice’ functions. However, decision-making has to remain decentralised. Clearly there are some HR processes which are common right across the world, and the distinction of which of these are handled by a shared service is crucial. Setting direction and strategy centrally and then at business unit and country level must follow as a logical process.

So the success of global HR thinking is largely dependent on effective information systems and corporate communications and I’ve seen some truly world-class examples of this in my career.

In order to achieve a measureable, global way of thinking, organisations must invest in global information systems, corporate communications and their people strategy, ensuring that they remain clear and consistent about the individual responsibilities to deliver local solutions. In this way, talent will flourish, knowledge will be shared, and culture and brand will be more consistent. For truly international business, HR should always be at the very heart of this.

This article was first published on LinkedIn as ‘One global HR.

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3 thoughts on “HR at the heart of international business

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