The increasing globalisation of business is creating challenges for HR professionals. In the past, many countries have approached the human resources and benefits functions in different ways. In the UK, for example, HR has generally been seen as a profession in its own right. But in other countries, such as France, the HR function has typically sat within the finance division and in Germany within the legal department.
As organisations take an increasingly global approach, international HR and benefits strategies are evolving from piecemeal handling of individual ex-pat and mobile workers’ needs into a strategic function in support of overall business goals.
Mike Theaker, global leader for HR effectiveness at consultancy Mercer, says: “What determines the positioning of the HR strategy is how progressive an organisation is in recognising the need to manage human capital and how it matches the HR and human capital strategy with achieving business goals. It is in less progressive organisations now where you will find HR falling under legal requirements, for example.”
In some cases, HR’s responsibilities have also evolved. “While HR used to just basically handle pay and industrial relations, now it focuses more on management. Key areas of responsibility are developing people and keeping them, building leadership capability and managing behavioural change within an organisation. What is required is different in response to the globalisation of business and the need to manage human capital on a global and a regional basis,” adds Theaker.
As HR becomes an increasingly international profession, employers and HR departments need to be as one with those in other countries. Figures from Mercer into reporting lines for HR departments show that last year, 67percent of HR functions from 1,400 organisations globally reported in to the chief executive officer (CEO), which is up from 54percent three years ago.
But organisations that are structured in this way should remember that any global strategy must be flexible enough to incorporate regional differences. Ben Wells, head of communications for Buck Consultants, says: “There are things pertinent to the local culture. There is a distinction emerging between compensation and benefits, where the former is something that is controlled, monitored and managed relatively centrally. People are having a dilemma as to whether benefits and perks should be centrally managed or monitored, because the country or company sees them as ways to differentiate their HR offering.
“One of the most interesting countries at the moment is Russia. You often hear stories of multinationals being unable to get any idea of what kind of benefits and rewards are paid, partly because everything is [done] on such an informal basis and partly because of tax issues. It is not because of anything illegal, it’s just the way things are done there.”
He adds that benefits practices also differ between western Europe and the US. “In the UK and US, the employment proposition is quite money driven, with incentive plans and retirement plans. In continental Europe, there is a different angle. The softer benefits and ones reflecting the workplace culture are where a local business can differentiate itself [from competitors]. Managers at global and regional level recognise that although they want to monitor and understand these things, they should not meddle too much, as this can destroy the unique local value some of these benefits reflect,” he explains.
Increasing challengesInevitably, this brings increasing challenges for HR professionals. Paul Sparrow, professor of international HR management at Lancaster University Management School, says there is much more to an international HR strategy than benefits, most notably talent management. “Many organisations will be moving to an international mobility function under a talent management umbrella or actually having it report directly to corporate HR. Organisations are thinking about what else they can do to resource overseas operations with sufficient capabilities.
“HR professionals have to make a judgement on why they are doing things in a certain way and whether there is a process they can alter. The ideal way is to see which country has the best way of handling part of the process and create an optimal solution using the best ideas from around the world.” EBn In the past, HR and benefits professionals performed different roles within organisations, depending on the country they were based in.
n International HR strategy is increasingly aligned with the organisation’s overall business goals, with the HR function reporting in to the chief executive officer (CEO).
n Internationally, HR strategy is now focused less on pay and benefits for ex-pats and domestic workers in a global company, and has more of a focus on human capital and talent management.
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