Global Human Resources Strategy

Ten Steps To A Global Human Resources Strategy

By John A. Quelch and Helen Bloom

Creating an effective global work force means knowing when to use "expats," when to hire "locals" and how to create that new class of employees -- the "glopats."

The scarcity of qualified managers has become a major constraint on the speed with which multinational companies can expand their international sales. The growth of the knowledge-based society, along with the pressures of opening up emerging markets, has led cutting-edge global companies to recognize now more than ever that human resources and intellectual capital are as significant as financial assets in building sustainable competitive advantage. To follow their lead, chief executives in other multinational companies will have to bridge the yawning chasm between their companies' human resources rhetoric and reality. H.R. must now be given a prominent seat in the boardroom.

Good H.R. management in a multinational company comes down to getting the right people in the right jobs in the right places at the right times and at the right cost. These international managers must then be meshed into a cohesive network in which they quickly identify and leverage good ideas worldwide.

Such an integrated network depends on executive continuity. This in turn requires career management to insure that internal qualified executives are readily available when vacancies occur around the world and that good managers do not jump ship because they have not been recognized.

Very few companies come close to achieving this. Most multinational companies do not have the leadership capital they need to perform effectively in all their markets around the world. One reason is the lack of managerial mobility. Neither companies nor individuals have come to terms with the role that managerial mobility now has to play in marrying business strategy with H.R. strategy and in insuring that careers are developed for both profitability and employability.

Ethnocentricity is another reason. In most multinationals, H.R. development policies have tended to concentrate on nationals of the headquarters country. Only the brightest local stars were given the career management skills and overseas assignments necessary to develop an international mindset.

The chief executives of many United States-based multinational companies lack confidence in the ability of their H.R. functions to screen, review and develop candidates for the most important posts across the globe. This is not surprising: H.R. directors rarely have extensive overseas experience and their managers often lack business knowledge. Also, most H.R. directors do not have adequate information about the brightest candidates coming through the ranks of the overseas subsidiaries. "H.R. managers also frequently lack a true commitment to the value of the multinational company experience," notes Brian Brooks, group director of human resources for the global advertising company WPP Group Plc.

The consequent lack of world-wise multicultural managerial talent is now biting into companies' bottom lines through high staff turnover, high training costs, stagnant market shares, failed joint ventures and mergers and the high opportunity costs that inevitably follow bad management selections around the globe.

Companies new to the global scene quickly discover that finding savvy, trustworthy managers for their overseas markets is one of their biggest challenges. This holds true for companies across the technology spectrum, from software manufacturers to textile companies that have to manage a global supply chain. The pressure is on these newly globalizing companies to cut the trial-and-error time in building a cadre of global managers in order to shorten the leads of their larger, established competitors, but they are stymied as to how to do it.

The solution for multinationals is to find a way to emulate companies that have decades of experience in recruiting, training and retaining good employees across the globe. Many of these multinational companies are European, but not all. Both Unilever and the International Business Machines Corporation, for example, leverage their worldwide H.R. function as a source of competitive advantage.

Anglo-Dutch Unilever has long set a high priority on human resources. H.R. has a seat on the board's executive committee and an organization that focuses on developing in-house talent and hot-housing future leaders in all markets. The result is that 95 percent of Unilever's top 300 managers are fully homegrown. Internationalization is bred into its managers through job content as well as overseas assignments. Since 1989, Unilever has redefined 75 percent of its managerial posts as "international" and doubled its number of managers assigned abroad, its expatriates, or "expats."

I.B.M., with 80 years' experience in overseas markets, reversed its H.R. policy in 1995 to deal with the new global gestalt and a new business strategy. Instead of cutting jobs abroad to reduce costs, I.B.M. is now focusing on its customers' needs and increasing overseas assignments. "We are a growing service business -- our people are what our customers are buying from us," explained Eileen Major, director of international mobility at I.B.M.

When managers sign on with these companies, they know from the start that overseas assignments are part of the deal if they wish to climb high on the corporate ladder. These multinational companies manage their H.R. talent through international databases that, within hours, can provide a choice of Grade-A in-house candidates for any assignment. Even allowing for company size, few United States-based multinationals come close to matching the bench strength of a Unilever or Nestlй. The Japanese multinationals are even farther behind.

This article outlines a global H.R. action agenda based on the approaches used by leading multinational companies. The goal is to build sustainable competitive advantage by attracting and developing the best managerial talent in each of your company's markets.

The strategy demands global H.R. leadership with standard systems but local adaptation. The key underlying ideas are to satisfy your company's global human resources needs via feeder mechanisms at regional, national and local levels, and to leverage your current assets to the fullest extent by actively engaging people in developing their own careers.

Implementing these ideas can be broken down into 10 steps. By taking these steps, a company should be able to put into place an effective global human resources program within three to four years.