Sep 01, 2014

Globally Localizing HR

For the last decade, the word “global” has been the buzzword of business. Almost every company is global, and every product or service is geared to a global audience.

However, some experts believe that while we live in a highly connected world, there is no “global market” but rather a set of globally connected “local” businesses.

Stages of Globalization

Stages of gloabalization

The DHL global connectedness study, pioneered by Pankaj Ghemawat, shows that since 2007, the world has become less connected each year because local countries have their own economic conditions and grow at their own individual pace.

Global Connectedness Trends

Global Connectedness Trends

Source: DHL

Separate research by Bersin by Deloitte finds that the highest-performing companies don’t standardize everything, but rather localize to the labor market and particular regulatory and cultural environment in each area that they do business in.

There is no denying the fact that businesses have transformed into open workplaces where people communicate all the time, there is increased reliance on highly flexible communication, social networking and mobile devices, and teams now include not only employees, but customers, contractors, and partners. Skilled talent is becoming even harder to find, and companies are starting to integrate contractors, contingent workers, and alumni together into an open talent economy.

Growing with this changing landscape, HR must adapt to be able to support global organizations with multicultural leaders and staff and to deal with variation in labor markets around the world.

HR’s Organizational Design and Function

For years, organizations were highly focused on globalizing their HR strategies. Many companies adopted an HR design that was built around centers of excellence and shared services. These HR organizations often focus on standardization and creation of a uniform work experience, with an overall goal to achieve a global view of an organization’s workforce.  Their intent is to operate consistently as a unified organization rather than as a series of fragmented parts based on geography or business units. However, often the globally developed programs that were rolled out did not adapt well to meet local needs. In these scenarios, local business units started developing their own programs. As a result, HR professions in the centers of excellence started becoming out of touch with what was happening in the front lines of business.

While not every company has the resources or need to localize its operations, it is becoming important in the ever-growing war for talent to try to localize talent practices. In almost any company, the needs of certain groups, such as product development or sales, are different from the needs of other functions, such as finance or accounting. Studies show that HR’s ability to impact the workforce as a whole contributes up to 37 percent of a company’s overall performance. Thus, refining HR operations and service delivery becomes important to company decision-making, improving talent capabilities, and increasing engagement and performance.

Localizing HR

“The world is not global, the world is local.” ~Josh Bersin, Founder and Principal at Bersin by Deloitte

HR Executives’ Assessment of global HR Capability Levels

HR Executives’ Assessment of global HR Capability Levels

 Source: Deloitte University Press

Successful companies tend to balance the need for global, efficient solutions with the need to be locally responsive and relevant in a ‘glocal’ approach to talent management.

Often, the crux of business localization is to have global platforms with local implementations. For example, in HR software, this means implementing global systems for recruiting and talent management that are designed to enable local customization.

Looking closely at recruiting, it’s easy to generalize that all labor markets are local. Recruiting in China or India is vastly different from recruiting in Spain or even the United States. Organizations need to develop a local employer brand that attracts and retains skilled talent. Global platforms that can be localized to fit the talent market, and tools that allow for information sharing and reporting, are essential. Currently, research from Bersin by Deloitte shows that over two-thirds of all companies do not have a global recruiting strategy.

Meanwhile, for performance management, applying a global set of performance plans and goals might not be the best practice. While companies should have a global set of cultural standards, performance plans and performance goals should be adjusted based on local labor markets.

Research on high-impact HR trends by Bersin by Deloitte found that, in large organizations, the most important drivers of impact are the capabilities that empower local HR teams to design, develop, and deliver local solutions within a global framework, with shared tools and technology.

Principles for Globally Localizing HR

Principles for Globally Localizing HR

Source: Bersin by Deloitte

How Companies Can Get Started

A globally integrated, locally tailored talent strategy requires a combination of centralized, global standards with distributed, highly trained experts. Experts recommend a few areas where companies can get started on localizing their global HR.

1) Leveraging global technology

Companies can implement a common global technology platform to support the global HR department, which offers self-service capabilities to managers and workers.

2) Use analytics to understand the global talent map

HR should use analytics to understand key variables in different geographic areas to determine how best to fill these needs. This analysis can lead to the creation of an overall global workforce plan.

3) Establish core global services

By establishing a core set of services for HR administration and talent communities, companies can start to form the global framework of consistency and standards that local HR teams can operate from within.

4) Create global talent mobility

To operate as a globally integrated company, the HR organization should have the ability to move talent around the world and ensure that the right skillsets from the global talent pool can be deployed against the best business opportunities.

5) Find local HR leaders

Once a framework of global processes, roles and goals is created, companies should find a local HR leader to design, develop and implement local programs.

6) Prioritize focus areas

Different global HR trends are important in individual countries and regions. Companies should analyze their locations of business and identify and prioritize which HR areas they want to focus on.

“As companies continue to globalize – and as talent becomes harder to find locally – companies will increasingly be composed of a global, highly diverse workforce. To thrive in this new environment, HR will need to reinvent itself to remain relevant and help their organizations navigate a complex and changing global labor market.” ~Accenture Institute for High Performance