In this Jeitocast Karen Beaman interviews Dr. Donald Harris, renowned data privacy expert, on the question of what is a global data privacy policy and why a company needs one. There are 40+ countries around the world with comprehensive privacy laws. Without a data privacy policy in place to ensure compliance with these laws, the company will not be able to get the data they need to support common HR processes and programs, to provide stock options, to manage compensation, to perform career planning and leadership development, and so on. A global Data Privacy Policy provides the opportunity to drive common standards and common approaches to HR data and process design. Listen to Don’s Jeitocast to learn more…

 

 What is a global data privacy policy? [17:30m]: Play Now | Play in Popup | Download

I recently had the pleasure to meet Professors Andrey G. Medvedev (Professor of Corporate Finance and International Business) and Tatyana Kovalyova (Director for Corporate Programmes and Associate Professor of the General Management and HR Management Chair) of the International Management Institute of St Petersburg (IMISP) in their home town of St. Petersburg, Russia (Prof. Medvedev is now with the Graduate School of Management at St. Petersburg State University). We discussed Human Capital Management and Payroll Administration in Russia.

Russian payroll resembles Western European payrolls in structure. Labor is governed by a labor code with additional laws/rules. Social packages and pensions are prevalent. Each company pays approximately 26% on top of the gross salary for social protection. A 13% flat rate tax is withheld from the gross salary at the source. Due to the soviet history, compensation is in most cases determined by a tariff system similar to what we find for public service compensation in France, Germany and other countries.

Symptoms of liberalization can be noticed in Russia. Employees are now less protected than they used to be in the Soviet Union when it was impossible to terminate employees. Strikes are now possible in Russia (recently, Ford and Coca-Cola). However, larger companies still carry some inertia from the Soviet times. A state-assisted society and a liberal society coexist. Pay in state-assisted organizations is very low. For instance, teachers are not well paid, so that many young teachers leave for industry jobs. In the Soviet Union, company departments for training, recruitment, compensation etc. were all totally separated. In some large companies this structure is still in existence.

The recognition of the importance of HCM is growing. For example, Severstal sees HCM as a competitive advantage, and the Severstal CEO is personally monitoring the company’s efforts in this area.  The association of IT Directors in Russia operates an HCM Forum.  Since October 2004, the non-profit partnership АRMC, the National Personnel Managers’ Union, organizes conferences, exhibitions and surveys. Yet, HCM clubs for Russian and international companies are still mostly separate.

Companies are quite open to outsourcing if they can benefit from a standard solution that fits their needs. Recruiting companies are moving into outsourcing services. Large consulting companies seem to have less influence now than at the beginning of the free market economy.

As for HCM systems, large Russian companies in most cases use SAP (popular) and Oracle as ERP solutions, often in conjunction with their old payroll system. International partners of the ERP providers, who came with the Western companies in 1992 when the free market economy started, generally provide the integration services. A characteristic example is Gazprom (also an important client of IMISP).

International companies generally bring their own systems to Russia when they start a greenfield  operation in the country. But they tend to keep an existing system in place when they acquire a Russian company. For example, Carlsberg acquired Baltika, the Russian brewer, and after a careful investigation decided to continue using the Russian ERP system Monolith that was highly tailored to their production requirements.

Smaller and newer companies often use 1C’s product odin C, a Russian ERP built around an accounting system. Microsoft Navision and Axapta are also popular with small and medium enterprises.

In conclusion, the Russian HCM and payroll landscape is not that different from the Western European countries. Russian companies are open to foreign software, open to Western methods and business, and open to outsourcing — yet they also put the emphasis conservatively on proven solutions that work.

Jeitosa has just completed the preliminary analysis of Global Readiness Survey results. Some of the key findings include:

• Survey participants were asked what top three challenges they encountered in going global in the HR/HRIT function. The majority of respondents indicated cultural differences (53%) as the top external challenge they faced, followed by compliance with data privacy regulations (42%).

The good news is that there are solutions available for these challenges: leadership development, cultural awareness training, change management programs, and global communication plans can help individuals understand and appreciate cultural differences and provide tools and techniques for improving cross-cultural collaboration. Formalized strategies for dealing with data privacy challenges, particularly in dealing with the European Data Privacy Directive, can be developed and include approaches such as Safe Harbor, Model Contracts, and Corporate Binding Rules.

• The top internal challenges companies are facing in going global fall into two major categories: lack of technology and systems to support global initiatives (51%) and lack of experienced and culturally adept resources to work effectively in a global environment – both a lack of global leadership (47%) and a lack of sufficient other global resources (45%). Going global is a relatively new initiative for many companies, so it is not surprising that many would still be immature in these areas.

Solutions to these challenges are readily available, but organizations need to step up and realize that building a global infrastructure with global systems and global people takes effort, resources, budget, and time. More and more vendors are globalizing their product and service offerings making it now possible to source a global solution for HR systems. With the increased mobility and globalization of the workforce, it is also now possible to find experienced resources who understand first-hand the issues and challenges in designing and deploying a global solution.

• Working globally, companies are also experiencing some successes. By far, the greatest success they are finding is in developing and appreciating global diversity (68%). While this is a challenge for some, it is also a success for others. Generally, the more familiar one culture is with another, the greater the understanding and acceptance of the differences that exist.

You can download a copy of the preliminary research report by clicking here. The participate in the survey and receive a free, personalized copy of the full report, benchmarking your organization to others who have taken the survey, please click here.

Much previous research has shown that success in international work is a function of an individual’s’ “Global Mindset” (Guy & Beaman 2003, 2005). Peter Senge describes global mindset as “deeply ingrained assumptions, generalizations, or even pictures or images that influence how we understand the world and how we take action” (The Fifth Discipline, 2006). An individual’s global mindset governs how they perceive things in the world and take action.

The Global Mindset model distinguishes three broad categories of mindset:

• Ethnocentric Mindsets take the home country as the basis for beliefs and evaluations, holding that their own culture and values are intrinsically superior to those of others, to the point even of assuming national superiority. It might be characterized by the expression: “the sun never sets on the British empire.” This type of mindset is effective when there is a need to standardize operations around the world or to protect the company’s intellectual property.

• Polycentric Mindsets are ones that adapt well to cultural differences and are effective at bridging the gap between home and host culture and company objectives. The polycentric mindset entails accommodation or assimilation with the foreign culture, sometimes even to the extent of “going native”. It might be characterized by the expression: “when in Rome do as the Romans.” This type of mindset is appropriate when there is a need for intense focus on the local market or regulatory situation.

• Geocentric Mindsets are ones that seek universals and commonalities across cultures and are effective at tying diverse groups together toward a common goal. A geocentric orientation implicitly assumes that a universal set of values govern human interaction, downplaying the importance of cultural differences. This mentality can best be summed up by the famous words of John Lennon, “Imagine all the people sharing all the world.” This type of mindset is appropriate for individuals who work at a global level, responsible for integrating the ideas and practices of different businesses and functions into a unified approach.

Different types of mindsets are best suited for different types of international assignments. With respect to international work, Paula Caligiuri and others have claimed that an individual’s global mindset is directly related to his or her effectiveness depending on the nature of the job. In his view, ethnocentric individuals tend to excel in environments that call for significant standardization of methodology or technology, while polycentric individuals thrive in situations that require considerable sensitivity to local conditions, and geocentric individuals excel in positions that require identifying commonalities and integrating different approaches. Hence, the role or job the individual is to perform is vital in determining the type of individual needed for the assignment.

A key role for Global HR is to understand the type of mindset required for each international assignment and to assess individuals to find the best fit based on the person and the job. Nothing can be surer of failure than to select the wrong mindset for the job. Imagine assigning an ethnocentric individual to an intensely local situation. The individual will be frustrated due to a lack of understanding of the environment, and the local team will be irritated at what they see as the arrogance of home office to have sent such a narrow-minded person. Similarly a polycentric individual sent to standardize and protect the interests of home office may be unable to achieve the objectives because of a deep empathy for the local people.

What type of mindset do you have? Do you know what type of mindset each of your international workers and expatriates have? Are you actively managing this aspect of your business?

One of the biggest challenges in working across cultures is clearly language. It never ceases to amaze me that, in the effort to save some money, companies often choose to do translations of corporate documents in-house using local staff. But translation is a discipline of its own and just because someone speaks the language doesn’t make them a good translator. In fact, often the opposite is true!

Consider these anecdotes from Gary Ferraro, The Cultural Dimensions of International Business (2005):

• An American airline offering service to Brazil advertised its “rendezvous lounges” in its business class section. They failed to realize that the word rendezvous in Portuguese refers to a room for illicit sexual encounters.

• The American Dairy Association’s successful ad “Got Milk?” was unfortunately translated in Mexico as “Are you lactating?”

• An American ink manufacturer attempted to sell bottled ink in Mexico through their advertisement that they could “avoid embarrassment” (from stains) through their brand of ink. However, the Spanish word used for “embarrassed” was “embarazar” (a “false friend”) which means to become pregnant. People thought the company was selling a contraceptive device.

These very embarrassing situations can easily be avoided through good translation services using native speakers, not someone who learned the language in school. It is only a native speaker who can understand the subtle messages that are being conveyed by the use of one word or phrase over another. And forget automated translation tools, such as Babelfish. While it’s a theoretically interesting concept, and many people have been busy for many years in the field of artificial intelligence trying to figure this out, the field of machine translation is still in its infancy.

HR should help the business identify the types of skills needed for different types of activities. For example, the ability to speak the language is clearly important for sales and marketing activities, whereas it is less important for a highly technical positions where the individual will be working with internal staff. Tying competencies and abilities to individual assignments (project-based on regular) — not just to specific job roles — is fundamental to working successfully internationally.