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The Globalization of Human Resource Practices
The Globalization of Human Resource Practices
*Dr.Padala Shanmukha Rao **Dr. N.V.S.Suryanarayana
The key to creating a consistent corporate culture across multiple locations is maintaining the critical balance between a strong corporate culture and local cultural differences. Purpose The report examines the changing roles the human resource (HR) function plays in a globally competitive marketplace and identifies the challenges of adapting to these roles. The objectives of this study were to:
Investigate how domestic and international companies conduct HR practices around the world.
Determine the top HR priorities for each organization type.
Determine the challenges that organizations face when trying to globalize their HR function and practices.
Determine what organizations are doing to institute a consistent corporate culture across all locations/offices.
Responses were gathered from 206 members of DDI's HR Benchmark Group. Two-thirds of the respondent organizations had operations in multiple countries (international); the remaining third operated solely in one country (domestic). The globalization of HR is characterized by increasing levels of decentralization.
Half of all international organizations reported having one primary HR department with independent regional HR staff.
Many international (37 percent) and domestic (42 percent) companies reported using a more centralized approachone primary HR department with dependent regional HR staff.
More than a third of domestic organizations reported having only a primary HR department with no regional HR staff.
Consistency of Human Resource Practices:
A majority of international (79 percent) and domestic (87 percent) organizations reported that their parent organizations are taking action to make HR practices more consistent across all locations/offices.
International organizations use consistent HR practices to help develop a common corporate culture (75 percent) and to improve the effectiveness of the HR function (73 percent).
Domestic organizations are creating consistent HR practices to improve both the effectiveness (81 percent) and the efficiency (71 percent) of the HR function.
Selection practices vary greatly across locations in international organizations. Selection practices that vary the most include:
Assessments (role plays and simulations).
Testing for selection purposes.
Internet advertising (recruiting).
Best Practices:
Organizations were asked to respond to the following: What is the most effective action your parent organization has taken to make HR practices more consistent across all locations/offices?
The following is a sample of responses:
Developed a long-term HR plan to ensure alignment of HR strategies/objectives with corporate objectives.
Created centralized reporting relationships around the globe.
Standardized assessment, development, and compensation practices.
Introduced practices to regions around the globe and allowed the HR function in each region the autonomy to do [its] job.
Created global policies/processes for data management, performance management, compensation, education, and development.
Tied regional accountability to performance management.
Shared HR best practices used in certain locations with all other locations.
Developed an HR mission statement.
Creating a corporate culture:
Many international companies (84 percent) indicated that their parent organization was trying to establish a corporate culture at all locations/offices that was consistent with its goals and vision. Most organizations (88 percent) reported that creating a corporate culture is difficult because, in certain locations, local cultures and customs have a moderate to great influence on the way business is conducted. Organizations have taken the following actions when trying to create a consistent corporate culture:
Communicated to all locations about a common corporate culture.
Allowed local cultures to maintain their identity in the context of the corporate culture.
Established common systems (e.g., accounting, marketing, MIS).
Provided management with education outlining how the company does business.
Created an organizational mission with input from all locations.
Created a written strategy outlining the corporate culture.
The Globalization of Human Resource Practices
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