Competitive Advantage through Integrated Strategic International HR Policy

by Dr. Barbara Heller, Heller Consulting

The Bottom Line Global organizations today are facing extremely tight competition, pressures on margins, increasing customer demands for flexibility and speed, and an increasingly volatile labor market. In such an environment, those organizations which distinguish themselves from their competitors are inevitably those which effectively leverage their human resources. A fully integrated strategic international Human Resource function is indispensable to making the slogan "our employees are our most valuable asset" into a powerful reality. The key to creating such an HR function is to involve cross-functional global HR staff in establishing a common vision and designing the optimal global HR structure.

The History In previous decades, typical HR departments were primarily clerical in nature, concerned with reacting to the needs of their operations colleagues and administering the staffing, training, and payroll functions. The HR department was centralized, reactive rather than strategic, inefficiently structured due to organic growth in response to disparate needs, and not a full business partner in the operational leadership of the company. The "soft" issues dealt with by the HR department were seen as almost a luxury or somehow secondary in importance to the serious business of business: operations, finance, and marketing.

Today's Reality Few companies can afford such an outdated HR model in the current business environment. Today's market leaders (AT&T, L.L. Bean, Inc., GE, Coca-Cola, Sun Microsystems, IBM, Microsoft) have integrated, strategic HR departments that proactively manage their human resources. These companies have policies such as: HR executives serving on the organization's top strategy and policy-making committees; HR strategy and planning functions proactively driving change to maximize the organization's alignment with the corporate strategy; decentralized decision making within the HR function, aligned around a common understanding of the organization's values, vision, and strategy; a lean HR department staffed by specialists working with each other and line managers to promote the corporate strategy through integrated aspects of HR management (strategy & planning, job analysis, recruitment, hiring, training, communications, performance management, internal consulting, succession planning, career development, etc.). High performing companies also integrate HR Management with other key support functions such as Total Quality Management, Knowledge Management, Supply Chain Management, and Information Technology.

The Vision International Human Resource Management fosters synergies and integration by providing a rational global structure and systems aligned with the corporate strategy. The corporate strategy and values are translated into regionally-meaningful priorities which guide tactical decisions. Interfaces between local and global systems bridge the gaps and provide continuity. Simultaneously, the international HR structure promotes opportunities for local strengths (staffing, innovations, learnings) to be shared throughout the global organization. The balance between centralized coordination and integrated decentralized implementation is struck in concert with the organizational culture and strategy. Alignment is reinforced through concrete measures of behaviors, accountability, and rewards. The international HR function enables employees throughout the organization to transcend cultural differences and achieve global synergies.

The Path HR leadership should involve people from throughout the global HR organization as much as possible in the process of redesigning the HR function. The first step is to create a common vision -- a clear common picture of what the department could become. The common vision could be established in a joint visioning session involving people from various levels, regions, and functions. The next step is use this picture as a guide to establish a rational international HR structure and to clarify the boundaries between local decision making and central coordination. Global voices must be incorporated as much as possible throughout this process to ensure not only deep buy-in from the staff but also the most effective, meaningful decisions. Everyone must be engaged in the process of identifying opportunities to eliminate duplication of services and unnecessary costs. Most importantly, the entire HR staff must come to a clear common understanding of how the various aspects of the HR function fit together around the corporate strategy.

Critical Issues Several key factors must be considered when creating such a "best practices" international HR structure:
1) Who are the key leaders in the HR function who will drive the international HR improvement effort? Do they have what they need to support them as they lead the strategic integration of the department? Do they share a common understanding of how to proceed?
2) What are the intercultural issues which could potentially become roadblocks to this process? How can the entire international HR department become more aware of intercultural communication, the differences in local values and priorities, and the overarching organizational culture, values, and strategic direction?
3) How can the entire effort be designed in a such a way that long-term savings and benefits outweigh the short-term investments in time, personnel, etc.?
4) What creative alternatives (lateral moves to other departments, early retirement packages, furlough and education programs, etc.) can be developed to reduce resistance to restructuring?

A Global Future By clarifying the common vision, increasing empowerment, and decentralizing decision making, the difficult decisions about how to best restructure to create a rational, integrated, international HR function can be made compassionately and effectively. The result will be a lean, decentralized yet integrated international strategic HR department which leverages the greatest competitive advantage from the organization's truly most important asset, its human resources.