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.

• 50-65% of CEO’s and executives feel that talent management is at the top of their list of concerns; yet 2/3 of employers have no plans in place to do anything about it.
• Long-term planning for talent management does not make sense; because of the dynamic nature of business, and the rapidly changing competencies (knowledge, skills, abilities, aptitudes, etc.) required to meet today’s needs and those in the short to mid-term. Who knows what competencies will be required 10 years out — when most employer business plans only extend 1-5 years out?

An interesting conundrum to say the least. How do we reconcile this paradox of being strategic partners supporting the business long-term goals but without the crystal ball to see into the future? Please share your thoughts on how you’re resolving this dilemma.

Thanks, Paul, for pointing this out to all of us!

Few would argue that we live in a global world. Yet, exactly what we mean by “global” varies widely depending on whom you are talking to and what you are talking about. Globalization can mean simply that a company has offices outside their home country and sells their products and services in other countries. There may be little communication or sharing across these offices, but the company is operating globally nonetheless. On the other hand, globalization can mean that a company offers one global service or product to the world, and each of the country offices serve as conduits to the local market. And, of course, global can also mean anything along the continuum between these two extremes.

Likewise, few would argue against the assertion that the world is becoming increasingly more global. Yet there is a growing awareness of greater instability and uncertainty in the world than ever before. The current financial crises with subprime interests rates in the U.S., the political instability in the Middle East and Asia, the growing imbalances between the rich and poor, and global warming are some of the factors affecting our world and causing some retrenchment – some people might even say breakdown – in globalization.

According to Pankaj Ghemawat, global strategist, Harvard professor, speaker, and author, too many people are spouting off about the flattening of the world, the death of distance and the disappearance of differences across countries. These rantings are what Ghemawat calls “globaloney” – the illusion of a borderless, flat world and hence the tendency to overestimate the extent of and process of globalization. The fact is that most economic activity – including direct investment, tourism, and communication – happens locally, not internationally. In addition, the differences across countries and cultures are larger than many people realize. Ghemawat goes on to explain that in our “semi-globalized” world, one-size-fits-all strategies don’t stand a chance. Instead, companies must expect cross-border differences and be able to reconcile the discrepancies in a way that makes sense for them based on their culture, business goals, and current state of international development.

The problem is that globalization isn’t easy – in fact it’s downright complicated. Cross-border integration, various languages, multi-cultural communication, diverse people, organizations, and business practices make understanding and managing the process of globalization a difficult task – difficult, but not insurmountable. To be successful we have to think about globalization as a process – a journey to a final destination of complete cross-border integration that we may never reach, or not reach within this century. So the questions we should be asking ourselves is how global should we be? What are the important areas of the HR function to make global and what areas should be left local or regional? How do we reconcile the seemingly paradoxical differences across countries and businesses?

Ghemawat offers an approach he calls the AAA Triangle which focuses on strategies optimized for adaptation (adjusting to differences), aggregation (overcoming differences), and arbitrage (exploiting differences). The three A’s represent three distinct types of global strategy that companies can pursue. Adaptation seeks to improve performance by maximizing the company’s local presence. Aggregation is a way for companies to expand beyond their home country, delivering economies of scale by emphasizing regional and global operations; this involves standardizing product and service offerings and grouping together development and production processes. Finally, Arbitrage is the exploitation of differences between national and regional markets, often by shifting separate parts of the operations in different places, for example, call centers in India, manufacturing plants in China, and research and development offices in Poland.

What is your company’s global strategy? What are you doing in HR to support it?

The organizational demands in the era of globalization, digitization, expanding networks, and eroding boundaries provoke the perennial question as to whether we should organize our operations locally, regionally, or globally.(1) A Perfect Storm is brewing with the new technological paradigm brought by Web 2.0, the shifting demographics with the entry of the Net Generation into the workforce, and the globalizing economy, creating a force for organizational change not seen since the Industrial Revolution. To deal effectively with these challenges, the next step in global organizational evolution is what I call the Collaborative Transnational. This hybrid organizational model is the only structure that is open and flexible enough to respond to the three dynamic forces converging in the Perfect Storm:

• Changing technology is spawning a new set of collaboration tools, collectively called Web 2.0. Wikis (collaborative documentation tools), blogs (web logs), podcasts (audio and video clips), tags (labels and search facilitation), mashups (lightweight web services integration), RSS (really simple syndication), and social networking sites (Facebook and Linked-In) are just some of the Web 2.0 tools that are facilitating global communication and changing the way we work. In the new Collaborative Transnational organization, communication is mutual, shared, egalitarian, and global.

• Shifting workforce demographics are bringing a new, highly diverse workforce together – we now see unprecedented dissimilar types of workers simultaneously in the workplace, from Veterans to Boomers to Gen X and Gen Y – four generations working side-by-side, each with different goals, ways of working, methods of collaboration, and reward and incentive desires. Clearly, “one-size-fits-all” organizational models and management approaches are obsolete! The Collaborative Transnational must support multiple work styles and meet often widely differing goals based on the individual.

• Global economics is creating a workplace with differing organizational structures across dispersed geographies, seeking to achieve the most effective and efficient method of service delivery for the global organization. From shared services, insourcing, outsourcing, and offshoring to virtual, matrixed, and project team organizations, enterprises are shifting their focus to take advantage of the opportunities of low-cost, high-value service delivery methods. The Collaborative Transnational is a hybrid model that seeks the appropriate organizational structure based on efficiency, effectiveness, and overall business value.

To work effectively in the new, diverse, high-tech, global environment we must promote collaborative behaviors to encourage disparate and dispersed individuals to work productively together. “To motivate the collaborative behavior that makes this new organizational model work, companies must create metrics that hold employees individually accountable for their contribution to collective success – an idea we call holding people ‘mutually accountable’” (2).

Mutual accountability for HR and HRIT in the Collaborative Transnational is facilitated by locating services and infrastructure in the most efficient and effective place within the global organization. The delivery of HR/HRIT services can be centralized globally, regionalized by geography, or decentralized locally (by country and/or business unit) as most appropriate based on the organization’s competencies, capacity, culture, and infrastructure.

To meet the demands of these turbulent times we have to first “think local” to ensure we truly understand our customers’ needs and then “act global” to connect individuals across the globe, providing a flexible technological infrastructure, an agile, adaptable organizational structure, and a seamless, integrated service delivery approach. Only then will we be in a position to build an effective global organization that will be competitive in the 21^st century.

References:

(1) Excerpted from Karen Beaman, “Think Local, Act Global: Building an Effective Global Organization” to appear in IHRIM’s new edition of 21 Tomorrows, due out Spring 2008.

(2) Bryan, Lowell L. and Claudia Joyce. “The 21^st Century Organization.” The McKinsey Quarterly. Number 3. 2005.

In this week’s Jeitocast, Karen Beaman interviews Michael Novak, CEO of Tertia Corporation, U.S. representative for China’s International Software Services Fair — the Comdex of China — and past president of Clark Consulting Group, the largest intercultural communications company in the U.S. with a focus on U.S.-Asia business communications. The jeito Karen and Michael discuss is:

What do companies need to know about doing business in China?

Michael begins by discussing some of the cultural differences that organizations need to be aware of when doing business in China:

1- Group Decision-Making: Decision-making and information sharing are considerably more consensus based and group-oriented, which can be a source of conflict when coming in contact with more individualistic cultures, such as the U.S.
2- Saving Face: The importance of saving face in a group and not putting someone in the position where they have to make a decision in front of others is important. There is a Chinese saying, “A person needs face like a tree needs bark.”
3- Demonstrating Humility: Humility is highly valued in China, particularly when talking about yourself or your family. Conflict can arise with the U.S. culture where much value is placed on self-promotion: this is seen as boastful in China.
4- Universal Knowledge: The Daoist tradition says that knowledge is universal: everyone is entitled to knowledge and wisdom. The cultural conflict shows up in issues around intellectual property, where in China ideas are seen as belonging to everyone.
5- Minimizing Idle Chatter: The Buddhist tradition values putting thought into everything you say; thus, typical Western activities like brainstorming can be more difficult in China as they are seen as wasting people’s energy.

Michael says there are four main reasons that companies are expanding their business into China:

1- Selling into consumer market, bringing growth opportunities outside of the first tier countries.
2- Lower costs, starting as a distributor and moving to set up offshore outsourcing operations.
3- Privatization of state-owned enterprises, offering significant new business opportunities.
4- Proximity to Korea and Japan, bringing access to other countries through regional operations.

 

 What do I need to know about doing business in China? [19:46m]: Play Now | Play in Popup | Download

I recently read an article about how doing business in China means turning the old adage, “Think Global, Act Local,” on its head. Frankly, it occurs to me that this inverse thinking, “Think Local, Act Global”¹ applies not only to working in China, and that many companies go about globalization completely the wrong way. In thinking globally first, organizations have ended up forcing standards and practices on local operations that are at best ineffective, because they simply aren’t relevant, or at worse counterproductive, because they’re demotivating and maybe even unethical or illegal in that culture. It is only by thinking locally first and truly understanding the specific business situation, the cultural context, the political/legal environment, the market pressures, and the competitive challenges that can you really hope to integrate the local business needs into an effective global solution.

The authors of this article go on to say, “The ‘think local, act global’ strategy implies a need for seemingly contradictory management skills. Managers do need to be local in their understanding, but they also must be global in their behavior. They must have real global experience and a mature understanding of (and appreciation for) MNCs’ global business conduct.”

To help you in your globalization journey, following is a list of The Behavioral Mistakes of Multinationals that global leaders must seek to avoid if they want to be effective in the world of Global 2.0:

1. Don’t apply double standards
2. Know the law and follow it
3. Don’t bend the rules
4. Avoid making symbolic moves
5. Avoid aggressive tactics over intellectual property
6. Guard against management insensitivity
7. Don’t strip-mine the profits
8. Don’t use local operations as “test labs”

We all need to challenge the status quo a bit more often and invert our thinking sometimes if we want to achieve breakthrough results.
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¹“The Challenge for Multinational Corporations in China: Think Local, Act Global.” By Seung Ho Park and Wilfried R. Vanhonacker. MIT Sloan Management Review. 31 May 2007.

The buying spree that private equity firms have been on over the last few years continues with Ceridian being the latest one to hit the HR market space.

Ceridian to be acquired for $5.3 billion in cash

Private equity shop THL Partners and title insurance outfit Fidelity National Financial will divvy up company.

CNNMoney, 30 May 2007

This move underscores the significant change that’s happening in HR technology — specifically the movement to Web 2.0, SOA, and SaaS architectures that’s been spurred on by vendors such as Salesforce.com and Dave Duffield’s new Workday. Ceridian suffers from a large client base on aging technology, making it virtually impossible for them to innovate and re-build their systems without significant disruption to their current clients. Yet it’s clear that they have to upgrade their technology if they want to remain a player in the market. Going private takes them out of the public eye, away from Wall Street’s pressures of quarter-on-quarter earnings, and allows them to make the investments they need to upgrade their technology.

“Private equity firms buy companies with mostly borrowed money, take them out of the public spotlight and retool them with the aim of selling them for a profit later.” CNNMoney.com May 15, 2007

Ceridian users should be excited by the opportunity this could bring!

What do you think? What are you doing about SOA and SaaS?

In this Jeitocast, Karen Beaman interviews Christian Adlung on the subject of what’s changing in the HR landscape in Europe. The top three trends that Christian sees occurring across Europe are: (1) harmonization of talent management practices and policies both on an European regional level and on a global level; (2) movement towards shared services, particularly placing shared service centers in Eastern Europe in countries such as Hungary and the Czech Republic; and (3) development of more strategic talent management capabilities, such as performance management, recruiting, and staffing. Christian also talks about the challenges multinational companies face when expanding their business in Europe: (1) the highly regulated and diverse legislative situation making it difficult to standardize practices across countries; (2) the strong cultural differences throughout the 27 different countries of the European Union, confounding the difficulties in harmonization; and (3) the uneven population size of companies in the different countries making it difficult to provide the same high levels of service to everyone.

 

 What's changing in the HR landscape in Europe? [17:00m]: Play Now | Play in Popup | Download

In this Jeitocast, Karen Beaman interviews Al Walker on the subject of developing a global HRIT strategy. As Al says, a Global HRIT strategy “is a means to the end, not the end in itself.” Al talks about the four major aspects of every good HRIT strategy: (1) alignment with the business strategy, (2) alignment the people strategy (HR), (3) alignment with organization’s overall IT strategy, and (4) consideration of compliance and governance issues.

 

 How do I develop a global HR IT strategy? [15:06m]: Play Now | Play in Popup | Download